According to the Board of directors of Sacombank, so far, this bank still has 50 trillion dong unsolved bad debt, and collaterals are mainly properties. The bad debt settlement target in this year as said by Duong Cong Minh, Chair of Sacombank, is to collect 15 trillion 20 trillion dong.
In 2017, Sacombank handled 20 trillion dong bad debt. However, the non-performing loan (NPL) ratio was still more than three percent higher than the level prescribed by the State Bank. Therefore, Sacombank’s profit last year was affected by the requirement of high risk provision and this bank’s pre-tax profit target for this year is just 1.6 trillion dong.
Recently, Sacombank has been one of the banks that strengthen the auction of bad debt, including the sale of bad debt to the Vietnam Asset Management Company (VAMC) and the self-settlement.
One of the banks that have had to put for provision most strongly in the first quarter of this year was the Joint Stock Bank for Investment and Development of Vietnam (BIDV). According to BIDV’s financial statement in Q1/2018, the bank’s revenues grew but provisioning costs have eroded most of the pre-provisioning profits, which amounted to six trillion dong.
However, BIDV reported the profit of nearly 2.5 trillion dong only after the first three months of this year, with the after-tax profit to increase 8.5 percent only. As of the end of Q1/2018, BIDV’s NPL ratio seemed to just going sideways, at 1.62 percent.
The Orient Commercial Bank (OCB) has just announced the consolidated financial statement in Q1/2018 with the total revenue from business operations reaching 1.157 trillion dong, up 93 percent. The operating costs swelled 41.1 percent to 398 billion dong.
The post-provisioning cost increased 89 percent to 140 billion dong. However, after deducting fees, OCB’s pre-tax profit was 619 billion dong, an increase of 2.5 times from the same period last year. Compared to the pre-tax profit plan of two trillion dong in this year, OCB completed 31 percent of the whole year plan after the first quarter only.
As of the end of March, OCB’s total assets were 77.628 trillion dong, down 7.9 percent from the beginning of the year. Customers’ deposit mobilisation decreased 0.3 percent to 53.047 trillion dong.
The credit growth reached 8.8 percent, raising the outstanding loans to customers to 51.974 trillion dong. The absolute bad debt at OCB swelled 253 billion dong to 1.117 trillion dong, mainly coming from the strong increase of debt in Group 3. OCB’s NPL ratio improved 1.79 percent at the end of 2017 to 2.13 percent at the end of Q1/2018.
The reality shows that the Resolution No. 42/2017/QH14 on pilot settlement of bad debt at credit organisations facilitated banks to strengthen the sale of assets but both VAMC and commercial banks are still very prudent when offering selling price and are difficult to give a low starting price.
According to Dr Can Van Luc, finance and banking expert, even valuation companies do not dare to offer too low selling price for fear of responsibility. This makes it impossible for the settlement process of old debts at banks to be accelerated, while new bad debt continued to arise, making it impossible for the risk provisioning burden to decrease, affecting banks’ profits.
