As the International Finance Corporation (IFC) and South Korea’s Welcome Debt Trading Co. Ltd. (WDT) have agreed to spend US$60 million purchasing non-performing loans in Vietnam, The Saigon Times spoke with Johannes Raschke, senior investment officer of IFC’s Distressed Asset Recovery Program (DARP), to discuss the market’s current state. Excerpts: The Saigon Times: Could you provide an assessment of the current non-performing loan (NPL) situation in Vietnam? How does this period compare to the spike of NPLs in 2013? Johannes Raschke: The overall NPL ratio of the Vietnamese banking sector has fluctuated, partly due to the lingering impacts of the Covid-19 pandemic, economic slowdown and global financial uncertainties. Some banks have struggled with higher NPL ratios, straining their liquidity and capital adequacy ratios. Compared to the NPL strain in 2013, there are several key differences. The previous surge was characterized by a systemic banking crisis with NPL ratios peaking at around 15% according to the credit rating agency Moody’s, necessitating extensive government intervention, including the establishment of the Vietnam Asset Management Company to handle bad debts. In contrast, the current situation is not as widespread or severe, with overall NPL ratios remaining lower, though still concerning for some banks. What […]
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