According to analysts, the asset quality of banks is clearly differentiated. In particular, many small-scale banks have recorded a decline in asset quality, mainly due to bad debts from home loans.
Mr. Nguyen Manh Tung, an analyst at VIS Rating, commented that in 2024, the recovery of high-interest home loans, along with the slowing rate of bad debt formation in the fourth quarter of 2024, contributed to boosting profits and improving asset quality at major banks.
In contrast, some small-scale banks still face pressure due to high bad debts and rising credit costs from individual customers as well as small and medium-sized enterprises (SMEs). At the same time, pressure on profit margins and liquidity issues become more intense in the context of increasingly fierce competition for deposit mobilization.
Asset risks in the banking sector remain broadly stable, with new NPL formation rates declining at some state-owned and large banks. The overall NPL ratio is expected to decline slightly by 5 basis points year-on-year to 2.25% in 2024.
However, the difference in credit quality between large and small banks is still quite clear. Some large banks, such as VPBank, have proactively tightened credit granting activities for new consumer loans. At the same time, home loans at Techcombank recorded a significant decrease in bad debt ratio in the second half of 2024.
Among state-owned banks, VietinBank recorded a sharp decline in the ratio of newly formed bad debts in the second half of the year, while BIDV and Vietcombank improved bad debts through an active debt write-off strategy.
In contrast, asset quality at small banks focusing on individual customers and SMEs such as SaigonBank, ABBank, and BAC A Bank tends to decline, mainly due to bad debt from home loans.
“We expect more favorable business conditions in 2025 to help reduce the rate of bad debt formation in the banking sector,” said Mr. Tung.
As of now, all banks have announced their financial reports for the fourth quarter of 2024. Data shows that the scale of bad debt (NPL), bad debt ratio and net bad debt formation (before risk settlement) of the entire industry in the fourth quarter of 2024 all recorded a decrease compared to the previous quarter.
Notably, the scale of net bad debt formation has decreased to the lowest level since the first quarter of 2022 - the time before bad debt began a sharp increase cycle due to negative impacts from macroeconomic factors and the real estate market.
In the fourth quarter of 2024, some banks such as VietinBank, Techcombank, TPBank and NamABank recorded improvements in net bad debt (before risk treatment), when on-balance sheet bad debts were transferred to better quality debt groups.
According to analysts at VDSC Securities, the downward trend in net NPL formation is supported by a significant improvement in customers’ repayment capacity in Q4/2024. This is partly reflected in the decline in interest balances, receivable fees, and average days of interest receivable compared to the previous quarter. This trend is forecast to continue to support the improvement of the banking sector’s asset quality in 2025.
Data from the fourth quarter 2024 financial reports of 27 banks showed that the industry-wide bad debt coverage ratio increased from 82.4% at the end of last year to 91.4% at the end of 2024. Of these, 14/27 banks reported an increase in the bad debt coverage ratio over the past year.
However, only 4 banks maintain a coverage ratio of over 100%, including Vietcombank, VietinBank, BIDV and Techcombank, while the remaining banks have a bad debt coverage ratio below this level.
Source: https://baodaknong.vn/nhieu-ngan-hang-suy-giam-chat-luong-tai-san-do-no-xau-tu-cac-khoan-vay-mua-nha-243245.html
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