Season of financial reporting for quarter 2/2019 of banks is on the peak. Despite the tightening of credit, the surge in non-interest income is no longer as abundant as last year. The big banks still race to announce record profits.
Not only the profit but also the bad debt figure is also surprising. While group V debt is not much changed, debts of group III and IV tend to increase strongly, at some banks they also increase exponentially.
As of June 30, 2019, Group III debtsbelow standard debts of Vietcombank increased by 5.7 times compared to the beginning of the year to 1.67 trillion dong. Previously, in the first three months of the year, this group of debt also rose by 3.4 times.
Meanwhile, debts of group V debts likely to lose nearly have no change, remaining at over 4.7 trillion dong and accounted for 67 percent of the bank’s bad debts.
Total bad debts in the table of Vietcombank at the end of June was 7.134 trillion dong, 14.6 percent higher than the beginning of the year, higher than the growth of loan balance. Accordingly, the bad debt ratio of the bank’s total outstanding loans from less than one percent had risen to 1.03 percent.
At MBBank, debts of group IV also increased strongly. Doubtful debt group at this bank increased by 73 percent to 1.379 trillion dong. Sub-standard debt also increased by 19 percent to 1.305 trillion dong. However, debt of group V quickly decreased from 962 billion to 317 billion dong. Therefore, in general, the bad debt ratio on total outstanding loans of MBBank declined from 1.33 percent to 1.26 percent.
Group V debt did not change much, but group III and group IV debt surged even in many banks. For example, in TPBank, group III debt increased by 64 percent to 485 billion dong while debt group IV nearly doubled to 468 billion dong. Meanwhile, group V debt at this bank only increased by 19 percent to 383 billion dong. With a big change in the doubtful debt group, the total bad debt in TPBank increased to 55 percent in the first six months, making the bad debt ratio on total outstanding loans increase from 1.12 percent to 1.5 percent.
Group IV debt in LienVietPostBank increased by 171 percent to 634 billion dong. Meanwhile, group III debt decreased by 47 percent to 264 billion dong; Group V debt increased slightly by seven percent to 1.009 trillion dong. Bad debt ratio in this bank also increased, from 1.41 percent to 1.48 percent.
Representing a small bank, at Kienlongbank, debt group IV increased by 182 percent to 125 billion dong. Bad debt ratio from less than one percent also increased to 1.15 percent.
In general, the bad debt ratio in the above banks is still low, below two percent. However, the strong trend of group III and IV also raises questions about banks’ ability to form new bad debts.
Q2/2019 financial statements before auditing announced by most banks have not disclosed an important item of VAMC bondswhere the banking system is estimated to have over 100 trillion dong of bad debts.
Besides impressive profit results, bad debts are still the market’s top concern to evaluate the performance of a bank. Although there have been many positive results in the handling of bad debts, this concern still haunts many banks so far, even the worry of arising new bad debts is always waiting.
