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Friday, June 14, 2024

Bad debts loom large

By Thuy Le

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Bad debts have been a concern in Vietnam’s banking sector so far this year. This indicates the vulnerabilities in the financial system and raises questions about what is needed to do to address it effectively. Bad debts continue to climb Q1/2024 financial reports by 28 commercial banks indicate a troubling rise in bad debts. After a 41% increase in 2023, total bad debts at these banks rose by over 14% to VND224,146 billion, surpassing the peak recorded in Q3/2023. While VPBank and SHB reported slight decreases in bad debts, the other 26 saw bad debts increasing, with 19 of them experiencing double-digit growth. Compared to late 2022, bad debts in the banking system have surged by 64%. Bad debt in category 2 (which requires attention) also rose by over 10% against late 2023. By March 31, 2024, the number of banks with a bad debt ratio exceeding 3% had picked up from five at the end of 2023 to nine. Analysts predict that the bad debt ratio would continue to rise, at least until the end of Q2/2024, before possibly declining in the second half of the year. Figures from the National Financial Supervisory Commission show that bad debt growth […]
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