After first three months of the year, the picture of business activities of Vietnamese banks gradually appeared. In general, the profitability of banks continued to grow, although the pace had slowed down compared to the previous two years. Specific credit growth to each bank has a clear differentiation. Besides the profit results, the market is also very attentive to the banks’ growth qualities, one of them is the number of bad debts.
According to statistics from 22 banks, by the end of the first quarter, the total number of bad debts reached more than 84.2 trillion dong, an increase of over 4.6 trillion dong in three months, equivalent to an increase of 5.9 percent. Meanwhile, the growth of outstanding loans in these 22 banks was lower, only 3.46 percent. Accordingly, the bad debt ratio on these banks’ outstanding loans in general increased from 1.62 percent to 1.66 percent.
The majority of banks had increasing bad debts: 15 out of 22 banks had absolute bad debts which increased compared to the beginning of the year and 14 out of 22 banks increased the bad debt ratio. The bank with the highest increase in bad debt in the first three months of the year was Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank), climbing by 2.272 trillion dong to 15.963 trillion dong, mainly due to debt group three and five. Compared to the same period last year, the bad debts in Vietinbank increased by more than 5.6 trillion dong. Notably, the bank’s bad debt accelerated sharply while credit continued to decline for two consecutive quarters. VietinBank’s loan balance at the end of March was 845.319 trillion dong, decreasing by 6.6 trillion dong compared to the beginning of the year.
The bad debt ratio of the bank also increased from 1.58 percent to 1.85 percent. Liabilities of losing capital accounted for more than 65 percent of the bank’s total bad debts.
Bad debt also surged sharply at Vietcombank with an increase of 729 billion dong (up 11.7 percent), pushing the bad debts to 6.952 trillion dong. Bad debt ratio also went up, from 0.98 percent to 1.03 percent. Following VietinBank and Vietcombank, VPBank ‘s bad debts increased by 610 billion dong in Q1 to 8.376 trillion dong. The ratio of bad debts to consolidated bank loans reached 3.62 percent, mainly due to a sharp jump in bad debt of the parent bank. As for the parent bank, the bad debt ratio also increased to three percent from 2.72 percent at the beginning of the year.
Other large banks such as Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank), Military Joint Stock Commercial Bank (MB), Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Saigon-Hanoi Joint Stock Commercial Bank (SHB) also had bad debts in the first quarter. The bad debt ratio of these banks totalled 2.14 percent, 1.41 percent, 1.78 percent and 2.4 percent respectively.
Two small banks with relatively high loan growth rates in the first quarter including Orient Joint Stock Commercial Bank (OCB) and Tien Phong Joint Stock Commercial Bank (TPBank) also have bad debts. Internal bad debts at OCB at the end of March increased by 33.6 percent compared to the beginning of the year, reaching 1.721 trillion dong. At TPBank, internal bad debts were 1.175 trillion dong, up 36.5 percent. The bad debt ratio of OCB and TPBank climbed from 2.29 percent and 1.12 percent to 2.82 percent and 1.39 percent respectively.
While bad debt ratio increased in most major banks, BIDVthe bank with the highest internal bad debts recorded a more positive change. The total bad debt of this bank decreased by 927 billion dong in the first three months, to 17.875 trillion dong. Accordingly, bad debt ratio dropped from 1.9 percent to 1.74 percent.
In addition to BIDV, there are six other banks whose bad debts declined in the first quarter such as Vietnam Joint Stock Export Import Bank (Eximbank), Hochiminh City Development Joint Stock Commercial Bank (HDBank), Asia Joint Stock Commercial Bank (ACB), Southeast Asia Joint Stock Commercial Bank (Seabank), Bao Viet Joint Stock Commercial Bank (BaoViet Bank), and Nam A Joint Stock Commercial Bank (Nam A Bank). Most banks kept their bad debt ratio below three percent and only about seven out of 22 banks, which had the bad debt ratio higher than two percent. However, the bad debts continued to increase in the first quarter of 2019, still causing many concerns, especially when the potential loss of debt was high in many banks.
