VietNamNet Bridge – The pressure on the banking system has been eased once the bad debts
are on the decrease. However, bankers themselves admitted that their worries
still have not been lifted.
Bad debts decrease thanks to the debt restructuring
The reports of the credit institutions showed that by
the end of April 2013, the bad debts of the whole banking system had reached to
VND137.1 trillion, an increase of VND18.7 trillion, or 15.8 percent in
comparison with that at the end of 2012.
As such, the bad debt ratio had increased to 4.67
percent from the 4.08 percent at the end of 2012 and 3.07 percent at the end of
2011.
Meanwhile, the figures about the bad debts by the
watchdog agency, though being much higher than the figures reported by
commercial banks, showed a positive sign that the bad debt ratio is on the
decrease.
By December 31, 2012, the bad debt ratio had decreased
by 1.2 percent from September 30, 2012, from nearly 9 percent to 7.8 percent.
The debt restructuring in accordance with the State
Bank’s Decision No 780 has allowed the banking system to restructure the bad
debt sum of VND284.4 trillion.
The decision has also helped banks avoid the
provisioning of VND14.4 trillion against the risks.
Meanwhile, the accumulative receipt & expenses
margin of the whole banking system had been VND13.1 trillion only by April 2013,
a decrease of 40 percent over 2011. This means that if the banks had had to
make the above said provisioning, they would have seen the minus receipt &
expenses margin of VND1.3 trillion.
By the end of April 2013, banks had provisioned
VND150.3 trillion for the loans, of which VND76.7 trillion has been used to
settle the bad debts (VND69.2 trillion was used in 2012, and VND7.5 trillion in
the first four months of 2012). As such the unused provisioned money is VND73.6
trillion, up by 14.6 percent in comparison with the end of 2012.
If the remaining provisioned money is used, this would
help settle about 50 percent of the bad debts, according to credit
institutions.
VAMC, the national asset management company, which is
in charge of dealing with the bad debts, is going to make debut on July 9. The
super-company, as believed by the governor of the State Bank, would allow settling
VND40-70 trillion worth of bad debts.
Risks still exist
Former Deputy Chair of the National Finance
Supervision Council -- Le Xuan Nghia, has warned that though the debt
restructuring solutions and the VAMC would help ease the bad debts, these could
not be the remedy for all banks, especially the small and weak ones.
Once VAMC buys bad debts by issuing bonds, the bond
would become the banks’ assets for which they would have make provisioning.
This means that the banks with bigger bad debts would see the expenses
increasing rapidly in the context of the slow lending.
Banks’ outstanding loans have increased slightly, by
2.98 percent in comparison with the end of 2012, but the loans remain modest.
The lending interest rates have decreased sharply, which has narrowed the
margin between the input and output interest rate to 1.93 percent from the 2.33
percent at the end of 2012, according to the Director of the Credit Department
of the State Bank Nguyen Thi Hong.
SGTT
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