According to the first quarter (Q1) business results of the Military Commercial Joint Stock Bank (MB), the bank’s provisions for risks increased by 19.5 percent to 692 billion dong, including 663.6 billion dong of specific provisioning and 39.7 billion dong general provisioning for borrowing customers.
The total bad debts settled in Q1 of MB were 345 billion dong. After handling 345 billion dong of bad debts in Q1, the bad debt ratio of MB is 1.41 percent compared to the 1.2 percent recorded in late 2017. The outstanding bad debts are 2.730 trillion dong, up by 23 percent compared to the beginning of the year.
In particular, MB’s debt group 3 accounted for 0.68 percent of the total outstanding loans, up by 78.1 percent compared to the beginning of the year, reaching 1.310 trillion dong. The bank’s debt group 4 accounted for 0.32 percent of the total outstanding loans, down by 8.3 percent compared to the beginning of the year, reaching 613 billion dong; and the debt group 5 accounted for 0.42 percent of the total outstanding loans, down by 0.8 percent compared to the beginning of the year, reaching 807 billion dong.
Meanwhile, Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) also announced the sharp increase in risk provisioning, which was 156 percent compared to the same period of the year, reaching 6.013 trillion dong. Of which, 215 billion dong were the general provisions for lending to customers, and 7.794 trillion dong were specific provisions for lending to customers (up by 60.2 percent compared to the same period of 2017).
In fact, banks can return the special bonds to Vietnam Asset Management Company (VAMC) and get back their bad debts and the secured assets held by VAMC in order to fully provision for risks and clear the debts, or self-handle the bad debts while ensuring the bad debt ratio below 3 percent after the exchange of VAMC’s bonds.
In addition to the record high risk provisioning, BIDV managed to clear 9.077 trillion dong of bad debts in Q1, equivalent to 1.03 percent of the total outstanding loans. The bank set aside a total of 42.823 trillion dong for risk provisioning from 2014 until the end of Q1 2018, equivalent to 9 percent of the total outstanding loans in 2014. Along with that, BIDV also settled a total of 33.392 trillion dong bad debts, equivalent to 7 percent of the total outstanding loans in 2014.
By the end of Q1 2018, the bad debt ratio after handling of BIDV was 1.62 percent, while it was 1.61 percent in late 2017. The new bad debts were only 259 billion dong in Q1 2018. Specifically, the bank’s debt group 3 was 4.766 trillion dong, equivalent to 0.54 percent of the total outstanding loans; while debt group 4 was 3.544 trillion dong, equivalent to 0.4 percent of the total outstanding loans; and debt group 5 was 5.898 trillion dong, equivalent to 0.67 percent of the total outstanding loans.
Among the listed banks, Asia Commercial Joint Stock Bank (ACB) recorded unchanged bad debt ratio (after settlement) of 0.71 percent compared to the end of 2017. ACB also recorded the strong growth of debt group 4 and debt group 5 in Q1 2018.
Specifically, the bank’s debt group 3 fell by 31.2 percent compared to the beginning of the year, reaching 224 billion dong, equivalent to 0.11 percent of the total outstanding loans. Meanwhile, the debt group 4 increased by 55.5 percent compared to the beginning of the year, reaching 428 billion dong, equivalent to 0.20 percent of the total outstanding loans; and the debt group 5 increased by 4.7 percent compared to the beginning of the year, reaching 825 billion dong, equivalent to 0.39 percent of the total outstanding loans.
The risk provisioning costs of ACB also significantly dropped by 78 percent compared to the same period of 2017 to 134 billion dong, including 129.12 billion dong of general provisions and only 16.13 billion dong of specific provisions. ACB managed to fully settle VAMC’s bonds in 2017 and no longer has to provision for these special loans from 2018. As ACB has completed provisioning for the outstanding assets involved the group of six companies of its former co-founder Nguyen Duc Kien, the provisioning costs fell by 77.93 percent compared to the same period of 2017.
Also experiencing decline in risk provisioning costs like ACB, Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) announced that its costs of risk provisioning fell by 73.71 percent compared to Q1 2018 to 61.16 billion dong. This amount was fully used for provivsioning for VAMC’s bonds. The bad debt ratio after risk provisioning of LPB was 1.07 percent and only 79.74 billion dong of bad debts newly arose in the first three monts of 2018.
Specifically, LPB’s debt group 3 increased by 45.91 percent compared to the same period of 2017 to 276 billion dong, equivalent to 0.26 percent of the total outstanding loans. The bank’s debt group 4 fell by 3.43 percent compared to the same period of 2017 to 148 billion dong, equivalent to 0.14 percent of the total outstanding loans; while the debt group 5 remained unchanged at 728 billion dong, equivalent to 0.67 percent of the total outstanding loans.
For Export Import Commercial Joint Stock Bank (Eximbank), the provisions for risks slightly increased by 13.92 percent compared to the same period of 2017, reaching 151 billion dong. The bank’s entire risk provisioning in Q1 was specific provisions for normal debts.
Eximbank did not provision for risks of VAMC’s bonds this year. Nevertheless, the bank currently holds 5.973 trillion dong of VAMC’s bonds and the roadmap for provisioning these bonds is 10 years (10 percent per annum). Thus, Eximbank will have to set aside about 600 billion dong to provision for VAMC’s bonds this year.
Eximbank’s bad debt ratio after settlement was 2.32 percent by the end of Q1 (2.27 percent in late 2017). The new bad debts arising in Q1 2018 were 38.59 billion dong. Eximbank has not yet handled any debts in the debt group 5 in Q1, while its debt group 2 accounted for 0.61 percent of the total outstanding loans, up by 36.2 percent compared to the beginning of the year, reaching 610 billion dong. The bank’s debt group 3 accounted for 0.88 percent of the total outstanding loans, down by 0.3 percent compared to the beginning of the year, reaching 811 billion dong. The debt group 4 of Eximbank accounted for 0.26 percent of the total outstanding loans, down by 26.5 percent compared to the beginning of the year, reaching 259 billion dong. The bank’s debt group 5 accounted for 1.19 percent of the total outstanding loans, up by 12.7 percent compared to the beginning of the year, reaching 1.195 trillion dong.
