The credit debt balance affected by Covid-19 estimated by the State Bank of Vietnam (SBV) reached two quadrillion dong, doubling the estimated one month ago. In the two scenarios given, SBV calculated that the bad debt ratio (including on-balance sheet and Vietnam Assets Management Company VAMC debts, unscheduled debts) would be at 3-3.7 percent by the end of 2020.
Notably, in the recent report to the government, SBV said that according to the preliminary assessment, the expected debt balance affected by the Covid-19 pandemic was up to two quadrillion dong, accounting for about 23 percent of the whole system’s outstanding debts, posing potential risks to banking activities.
Thus, this figure has doubled compared to the estimate of one month ago of the banking industry.
In particular, the outstanding loans of the business of minerals, fuels, construction materials, automobile and spare parts are most affected with 548 trillion dong, accounting for 6.6 percent of total outstanding loans.
Processing-manufacturing industry has the outstanding debts of about 520 trillion dong, accounting for 6.3 percent of the total, of which food and beverage processing industry is most affected.
Accommodation, food and services have 169 trillion dong loans affected, accounting for two percent of total outstanding loans. The group of agriculture, forestry and fishery has the affected debt balance of 157 trillion dong, accounting for 1.9%, focusing on vegetable, aquatic, rubber, coffee, tea and pepper industries.
Real estate business group has 145 trillion dong of debts affected, accounting for 1.75 percent of the total outstanding loans; Transport group 139 trillion dong, accounting for 1.68%; The group of BOT and BT projects 110 trillion dong, accounting for 1.35%.
According to estimates by SBV with two economic growth scenarios as proposed by the Ministry of Planning and Investment. In case the outbreak of Covid-19 is controlled in the first quarter, the bad debt ratio (including on-balance sheet, sold to VAMC and debts classified) will be at 2.9 percent 3.2 percent at the end of the quarter II and from 2.6 percent 3 percent by the end of 2020.
In the case of more complicated in which the epidemic will be well controlled in the second quarter, this rate will be close to four percent by the end of the second quarter and 3.7 percent by the end of 2020 and even higher. This will lead to affecting the progress of implementation of restructuring plans associated with dealing with bad debts of credit institutions and the resilience of weak credit institutions.
SBV also said that the credit demand was lower than the same period in previous years before March 31, 2020, the credit balance reached 8.3 quadrillion dong, up 1.3 percent compared to the end of 2019 (3.19%), the pace of each month tended to improve. In particular, January increased by 0.1%, February increased by 0.07%, and March by 1.1%.
Although credit institutions have launched many preferential lending programmes, reducing 2-2.5 percent per year on a large scale, the demand for loans to expand production, business and consumption of customers has the downward trend, leading to limited capital withdrawal of customers.
