The State Bank of Vietnam (SBV) has taken steps to tighten regulations over banks’ use of short-term deposits, reducing its ratio used to finance medium and long term loans from 60 per cent now to 40 per cent by September next year.
By the end of September 2021, banks are expected to cut it to 37 per cent. From October 2021 to September 2020, the ratio must be reduced to 34 per cent and from October 1, 2020 onward, it will be cut to maximum 30 per cent.
The central bank’s policy aims to reduce risk, tighten control and to channel capital into priority sectors and small- and medium-sized enterprises, according to the SBV.
In a recent development, the latest quarter reports from several commercial banks cited by cafef.vn have shown positive earnings but also an increase in the number of non-performing loans (NPLs) compared to the same period last year.
By the end of September, 23 banks reported an alarming trend of NPLs rising. Notably, ABBank said its proportion of NPLs in total asset value increased by 79 per cent, compared to the level at January 1, 2019, attaining VNĐ1.7 trillion (US$73 million). Its NPLs’ share in total outstanding loans increases from 1.89 per cent from the beginning of the year to 3.39 per cent.
Reports from other banks also showed a 39 per cent increase for SHB at VNĐ7.2 trillion, a 32 per cent increase for Techcombank at VNĐ3.7 trillion and 30 per cent increase for MBBank at VNĐ3.7 trillion.
The big four banks (Agribank, BIDV, Vietcombank and VietinBank) also reported similar findings with Vietcombank’s NPLs totalling VNĐ7.6 trillion and BIDV VNĐ22.4 trillion.
The SBV put total bad loans of 23 banks across the country at VNĐ94 trillion, up 16 per cent since the beginning of the year. NPLs have been on the rise even for banks with modest or no credit growth since the end of last year.
Notably, potentially irrecoverable debt according to SBV’s standards has risen fast, with ABBank reporting more than VNĐ1trillion, Vietcombank VNĐ4.9 trillion and BIDV VNĐ12.2 trillion.