Finance companies rarely publish financial statements, but their performances of finance companies which are subsidiaries of banks are still revealed through the parent banks’ financial statement. With the main product being consumer loans, the bad debt ratios of finance companies are still much higher than that of banks. In addition to the loan growth figures, finance companies’ ratios of bad debts also draw attention of the market.
By the end of September 2019, the total outstanding loans of the consolidated Vietnam Prosperity Commercial Joint Stock Bank (VPBank) were 254.186 trillion dong, up by 14.5 percent compared to the beginning of the year. In particular, the outstanding loans of VPBank alone reached 189.534 trillion dong, up by 12.7 percent. Accordingly, VPBank’s FE Credit recorded more than 64.6 trillion dong of outstanding loans, up by 20 percent compared to the beginning of the year. The finance company continued to hold the largest market share in the consumer credit market.
The on-balance sheet bad debts of the consolidated VPBank were 8.881 trillion dong, including 5.516 trillion dong of the parent bank and about 3.365 trillion dong of FE Credit. Accordingly, the estimated bad debt ratio of FE Credit as of late September 2019 was 5.2 percent. This number has continuously fallen since the early year. Previously, FE Credit’s bad debt ratio was 5.98 percent as of December 30th 2018 and 5.35 percent as of June 30th 2019.
For Military Commercial Joint Stock Bank (MBBank), the consolidated bank’s total bad debts as of September 30th were 3.703 trillion dong, up by 29 percent over the beginning of the year. In particular, the irrecoverable debts increased by up to 40 percent to 1.348 trillion dong. The ratio of bad debts on total outstanding loans rose from 1.33 percent to 1.54 percent.
Meanwhile, according to MBBank’s separate financial statement, the bad debts of the parent bank by the end of September were 3.112 trillion dong, up by 23 percent compared to the beginning of the year. Thus, the bad debts of MBBank’s subsidiary MCredit were estimated at about 590 billion dong.
The total outstanding loans of the consolidated MBBank by the end of September 2019 reached 240.211 trillion dong. In particular, the outstanding loans of the separate bank were 230.143 trillion dong, and 2.564 trillion dong of loans granted to Maritime Commercial Joint Stock Bank (MSB). Accordingly, it is estimated that MCredit’s outstanding loans were about 7.504 trillion dong. Meanwhile, the company’s bad debts reached about 590 billion dong, accounting for up to 7.9 percent of the company’s total outstanding loans to customers. This ratio was significantly higher than the beginning of the year which was just around six percent.
For HCM City Development Commercial Joint Stock Bank (HDBank), as of late September 2019, the on-balance sheet bad debts of the consolidated bank were 2.097 trillion dong, up by 11 percent compared to the beginning of the year. The ratio of bad debts on total outstanding loans to customers of the consolidated bank was 1.49 percent.
The bad debts of the parent bank alone was 1.415 trillion dong, accounting for 1.09 percent of the total outstanding loans to customers. Thus, the bad debts of HDBank’s finance company HD Saison were about 682 billion dong, accounting for 6.21 percent of the total outstanding loans of the company. HD Saison’s bad debt ratio in late September 2019, thus, slightly declined compared to the 6.3 percent recorded in the beginning of the year.
In the bad debt structure of finance companies, the majority is group three and four debts, while the group five debts irrecoverable debts account for very low rate. For example, at FE Credit, the group three debts are more than 3.2 trillion dong, accounting for over 95 percent of the total bad debts. Similarly, for HD Saison, the irrecoverable debts only account for four percent of its total bad debts.
