Associate Professor Dr. Nguyen Huu Huan at the University of Economics HCMC spoke with The Saigon Times over non-performing loans (NPL) in the banking sector A “blood clot” of bad debt unlikely The Saigon Times: The increase in bad debt in the first quarter of this year was projected by experts beforehand and also reflected in a report on the macroeconomic performance in Q1 of 2024 by the Ministry of Planning and Investment. Is this just a technical issue, or is it that bad debt is actually increasing despite Circular 02/2023 on restructuring debt and keeping debt classifications unchanged? Associate Professor Nguyen Huu Huan: Credit growth turned strong in the final days of the fourth quarter of 2023, driving down non-performing loans in the banking system to 1.93% from 2.24% at the end of the third quarter of 2023. That’s a technical decrease. As of March 25, 2024, credit growth had reached 0.26%, while NPLs in the banking system had increased. Thus, NPLs are increasing in reality rather than just being a technical factor. So how is bad debt rising? As the economic outlook turns gloomier, banks have tightened credit, for example, reducing the loan-to-value ratio on secured assets, limiting […]
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