Bad debt is rising again, prompting concerns among banks and authorities, after a long period of strong efforts being taken to control credit quality and tackle non-performing loans in the banking system. It looks like the return of bad debt is inevitable as the economy evolves. A surge of bad debt Data from the State Bank of Vietnam (SBV) showed the ratio of bad debt to outstanding loans increased from 2% early this year to 3.56% in late July, at over VND440 trillion. However, when taking into account on-balance-sheet debt, debts sold to the Vietnam Asset Management Company (VAMC) that have yet to be written off, and doubtful debts at credit organizations (including restructured debts, high-risk corporate bonds, problem collectibles, etc.), this ratio rose to 6.16%, or VND768 trillion. A surge in bad debt has been anticipated for some time now in the context of economic slowdown, enterprises grappling with hardships, laborers’ shrinking disposable incomes affecting their ability to repay debt, and a struggling assets market. The SBV data also indicated that bad debt in the real estate sector had edged up to 2.58% as of the end of July this year against 1.8% the year-earlier period. In fact, the […]
To read more, please click here.
