Collecting debts
has been highlighted as one of the most important tasks for banks for now. They
have every reason to fear that many debts could be irrecoverable. 30 percent of
Vietnamese businesses reportedly are on the verge of bankruptcy or dissolution.
Though having declared the huge profits of hundreds or thousands of
billions of dong for the first six months of the year, managers of many
commercial banks are now on the tenterhooks, because of the fear about the
overdue debts and bad debts.
Businesses cannot sell products, banks get worried
Last week, the manager of a HCM City-based bank had to fly to Hanoi twice to work out with the managers of the Hanoi branch on a “special” loan. In fact, the due payment has not come yet, but the bank can see the high risks of late payment.
“The loan is not too big, but we have continuously urged the branch to try to collect debt,” the manager said. “The branch has been instructed to be always side by side with the enterprise to boost sales to increase the revenue, which allows it to get money to pay bank debt”.
“We have been working out on the case to learn from the mistakes, which would be seen as a lesson for our whole system,” he said.
“Businesses feel anxious about slow sales, we are also worried stiff,” a member of the board of directors of a Hanoi-based bank said. “The output of enterprises is products and services, while our output is the efficiency of clients’ business.”
He went on to say that it is understandable why bankers have worries about irrecoverable debts. The reports on the national economy all say that the purchasing power is very weak and the inventory level at enterprises is very high. In the first six months of 2011, the total revenue from consumer goods and services retailing reportedly increased by 22.6 percent in comparison with the same period of the last year.
However, if not counting on the price increases, the actual growth rate would be 5.7 percent only. Meanwhile, the inventory index by early July 2011 of the processing and manufacturing industries had increased by 16 percent in comparison with the same period of the last year. Once enterprises cannot sell products, they will not have money to pay debts back to the banks.
The pressure harder towards the year end
Deputy General Director of Vietinbank, Le Duc Tho, said that the debt collection has been paid a special attention by the bank in the context of the current economic difficulties.
“We are striving to curb the bad debt ratio at 1.0 or 1.1 percent this year,” Tho said. “However, the 2nd-group debt (overdue debt) has been increasing, which proves to be unavoidable.”
Director of the Hanoi branch of a big commercial bank has admitted that he has lent too much in the last time, therefore, he has been asked by the bank’s managers to focus on collecting debts, while the management work has been handed over to another person.
He went on to say that the managers of the bank branch have to directly meet managers of the enterprises which have big loans or have difficulties in payment, to discuss the solutions to the problems.
“If businesses can live, we will be able to exist, and vice versa,” a banker explained.
Truong Van Phuoc, General Director of Eximbank, also said that credit institutions now need to keep cautious to make decisions to provide loans amid the public investment cuts, public spending and the low demand.
Also according to Phuoc, though banks have reported high sums of profits for the first half of the year, the business efficiency of the banks is not high. The profitability level of the banking system is just at 12-13 percent, much lower than the current average interest rate of 17-18 percent.
Businesses cannot sell products, banks get worried
Last week, the manager of a HCM City-based bank had to fly to Hanoi twice to work out with the managers of the Hanoi branch on a “special” loan. In fact, the due payment has not come yet, but the bank can see the high risks of late payment.
“The loan is not too big, but we have continuously urged the branch to try to collect debt,” the manager said. “The branch has been instructed to be always side by side with the enterprise to boost sales to increase the revenue, which allows it to get money to pay bank debt”.
“We have been working out on the case to learn from the mistakes, which would be seen as a lesson for our whole system,” he said.
“Businesses feel anxious about slow sales, we are also worried stiff,” a member of the board of directors of a Hanoi-based bank said. “The output of enterprises is products and services, while our output is the efficiency of clients’ business.”
He went on to say that it is understandable why bankers have worries about irrecoverable debts. The reports on the national economy all say that the purchasing power is very weak and the inventory level at enterprises is very high. In the first six months of 2011, the total revenue from consumer goods and services retailing reportedly increased by 22.6 percent in comparison with the same period of the last year.
However, if not counting on the price increases, the actual growth rate would be 5.7 percent only. Meanwhile, the inventory index by early July 2011 of the processing and manufacturing industries had increased by 16 percent in comparison with the same period of the last year. Once enterprises cannot sell products, they will not have money to pay debts back to the banks.
The pressure harder towards the year end
Deputy General Director of Vietinbank, Le Duc Tho, said that the debt collection has been paid a special attention by the bank in the context of the current economic difficulties.
“We are striving to curb the bad debt ratio at 1.0 or 1.1 percent this year,” Tho said. “However, the 2nd-group debt (overdue debt) has been increasing, which proves to be unavoidable.”
Director of the Hanoi branch of a big commercial bank has admitted that he has lent too much in the last time, therefore, he has been asked by the bank’s managers to focus on collecting debts, while the management work has been handed over to another person.
He went on to say that the managers of the bank branch have to directly meet managers of the enterprises which have big loans or have difficulties in payment, to discuss the solutions to the problems.
“If businesses can live, we will be able to exist, and vice versa,” a banker explained.
Truong Van Phuoc, General Director of Eximbank, also said that credit institutions now need to keep cautious to make decisions to provide loans amid the public investment cuts, public spending and the low demand.
Also according to Phuoc, though banks have reported high sums of profits for the first half of the year, the business efficiency of the banks is not high. The profitability level of the banking system is just at 12-13 percent, much lower than the current average interest rate of 17-18 percent.
Source: SGTT/ VNN
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.
No comments:
Post a Comment