Vietnam’s bad debt shrinking

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dong1The bad debt ratio in Vietnam’s banking system eased for a second straight month in June and was 4.46 per cent of the total loans in that month, down from 4.65 per cent in the previous month, the central bank said on August 29.

Non-performing loans (NPLs) in June were still above the figures at end of 2012, when 4.08 per cent of loans were bad, according to data from the State Bank of Vietnam.

The bank did not provide any value for the bad debt as of June. It was around $7 billion in May, based on the central bank’s data. However, independent experts have estimated the ratio could be considerably higher.

Credit ratings agency Fitch said in July that the broad range of NPL estimates came from poor transparency, classification and accounting.

Last month, Vietnam launched an asset firm to buy up the bad debts of its banks, a move touted as one of its biggest reforms but seen as merely a band-aid fix for its ailing, credit-starved economy. But the firm has yet to start buying bad debt, financial analysts said, as the action is closely followed on domestic markets for clues of easing credit.

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Reading Time: 1 minute

The bad debt ratio in Vietnam’s banking system eased for a second straight month in June and was 4.46 per cent of the total loans in that month, down from 4.65 per cent in the previous month, the central bank said on August 29.

Reading Time: 1 minute

dong1The bad debt ratio in Vietnam’s banking system eased for a second straight month in June and was 4.46 per cent of the total loans in that month, down from 4.65 per cent in the previous month, the central bank said on August 29.

Non-performing loans (NPLs) in June were still above the figures at end of 2012, when 4.08 per cent of loans were bad, according to data from the State Bank of Vietnam.

The bank did not provide any value for the bad debt as of June. It was around $7 billion in May, based on the central bank’s data. However, independent experts have estimated the ratio could be considerably higher.

Credit ratings agency Fitch said in July that the broad range of NPL estimates came from poor transparency, classification and accounting.

Last month, Vietnam launched an asset firm to buy up the bad debts of its banks, a move touted as one of its biggest reforms but seen as merely a band-aid fix for its ailing, credit-starved economy. But the firm has yet to start buying bad debt, financial analysts said, as the action is closely followed on domestic markets for clues of easing credit.

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