According to a report released at the beginning of 2018 by the National Financial Supervisory Commission (NFSC), asset quality of credit organisations has been improved. Accordingly, the non-performing loan (NPL) ratio of credit organisations as of the end of 2017 was about 9.5 percent, down sharply from the 11.9 percent at the end of 2016, mainly due to the decrease in bad debts hidden in restructuring debt, corporate bonds and external receivables.
Also according to this organisation, the bad debt settlement process of credit organisations was further strengthened, especially in the last months of the year. Credit organisations limited transferring debt to the Vietnam Asset Management Company (VAMC), handled bad debt via such methods as debt sale, sale of collaterals, use of risk provisions, and other forms were further strengthened.
However, statistics from financial statements in Q1/2018 by 13 large and medium banks in Vietnam showed that bad debt is trending to increase again.
Specifically, as of March 31, 2018, the total bad debts of 13 banks were 67.8 trillion dong, up eight percent from the beginning of the year.
In terms of absolute value, 12/13 banks had bad debt to increase in the first three months of the year. However, thanks to credit strengthening, only 8/13 banks had the bad debt/total outstanding loans ratio to swell.
Meanwhile, the total debts in Group 5, which is likely to be irrecoverable, as of the end of March also increased 9.2 percent from the beginning of the year, to 34.6 trillion dong, accounting for 51 percent of the total bad debt while this figure at the end of 2017 was 50.5 percent.
Currently, VPBank has the highest proportion of bad debt in the surveyed group, reckoning for as much as 4.15 percent of the total loans, compared to 3.39 percent at the beginning of the year. However, this amount of bad debt mainly focused on Group 3, or sub-prime debt (accounting for 58.6 percent of the total bad debt), while irrecoverable debt reckoned for 18 percent.
Techcombank is also one of the banks that had bad debt to increase quite strongly in Q1/2018 with the increase from nearly 2.6 trillion dong to more than three trillion dong, equal to 18.9 percent. Irrecoverable debts also swelled to nearly 1.7 trillion dong, or more than nine percent from the beginning of the year, and making up 55.3 percent of the total bad debt. The NPL ratio of the bank is currently 1.87 percent, compared to 1.61 percent at the beginning of the year.
Meanwhile, though the NPL ratio was still quite high, Sacombank had significant development in the bad debt settlement in the period. Accordingly, as of March 31, 2018, the NPL ratio out of the total outstanding loans retreated to 4.01 percent from 4.67 percent at the beginning of the year.
Reportedly, 2018 is the second year that Sacombank operates under the post-merger restructuring scheme approved by the government and the State Bank. The key of the scheme is to allow Sacombank to handle bad debt within 10 years while Sacombank targets to basically achieve the target within five years.
According to the bank’s leaders, this year, Sacombank targets to handle at least 15 trillion dong bad debt in the restructuring scheme, divided by quarters, focusing on reducing NPL ratio to 3.6 percent in Q2, 3.3 percent in Q2, and less than three percent in Q4.
Regarding absolute figure, BIDV is currently the bank that has the largest number of bad debt with 14.2 trillion dong, up nearly 200 billion dong from the beginning of the year. Of which, irrecoverable debt stood at nearly 5.9 trillion dong, increasing 12.8 percent from the beginning of the year and accounting for 41.5 percent of the total bad debt. The NPL ratio of banks is still 1.62 percent, unchanged from the beginning of the year.
Vietinbank is the bank that has the second biggest amount of bad debt in the surveyed group, amounting to nearly 10.3 trillion dong, up 14.3 percent from the beginning of the year. A noticeable thing is that the irrecoverable debt of the bank increased as much as 28 percent, to nearly 6.7 trillion dong, reckoning for 64.9 percent of the total bad debt, higher than debt in group 5 of BIDV.
The NPL ratio of the bank swelled from 1.14 percent at the beginning of the year to 1.25 percent of the total outstanding loans.
*Profits still increase despite increased provisioning costs
BizLive’s statistics also show that 7/13 banks increased the provision in Q1/2018, with the total provisioning of nearly 14.7 trillion dong, up as much as 36.9 percent from the same period of 2017.
BIDV was one of the banks that put for provision most strongly in the surveyed group when spending as much as more than six trillion dong on provisioning, an increase of 2.56 times from the same period.
The provision that accounted for as much as 70.7 percent of the bank’s total net profit caused BIDV to record only 2.485 trillion dong pre-tax profit at the end of Q1, up 9.2 percent from the same period last year.
VPBank also increased putting for provision at 57 percent, to 2.652 trillion dong, representing 50.3 percent of the net profit.
At Vietinbank, this figure was 2.351 trillion dong, up 14 percent from the same period, and made up 43.7 percent of the net profit.
Though the provisioning still accounted for a relatively large amount, the noticeable thing was that all banks recorded the profit to grow from several dozens of percent to several hundreds of percent compared to the same period last year.
With the advantage of capital scale as well as assets, the two state-owned giants including Vietcombank and Vietinbank are still leading the system in the attained profit.
Of which, Vietcombank still holds the first position with 4.359 trillion dong pre-tax profit in Q1/2018, growing as much as 59.3 percent compared to the same period last year. With this result, the bank has completed as much as 33.5 percent of the whole year profit plan (13 trillion dong).
Vietinbank ranks the second with 3.027 trillion dong profit, up 19 percent year-on-year. For BIDV, due to strong provisioning, the bank’s profit significantly decreased, and was surpassed by VPBank and Techcombank with the profit of 2.618 trillion dong and 2.568 trillion dong respectively.
Some other joint stock commercial banks also recorded trillions of dong profit just in the first quarter of the year such as MB (1.918 trillion dong), up 72.6 percent year-on-year, or ACB (1.490 trillion dong, a year-on-year increase of 2.5 times), completing 28.2 percent and 26.1 percent of the whole year plan respectively.
Meanwhile, in terms of growth speed, Eximbank and VIB were two among the banks that had the pre-tax profit to increase most strongly from the same period. Specifically, at the end of Q1/2018, Eximbank attained 560 billion dong pre-tax profit compared to 518 billion dong of VIB, an increase of 3.3 times from the figure achieved in Q1/2017.
