Bad debts at a number of credit institutions in HCMC in 2011 were high, even sharply rose compared to the previous year, said the central bank’s HCMC Branch.
The branch unveiled the above information in a review report on last year’s performance and the orientation for this year.
According to the report, the fifth-group debts – seen as the worst non-performing loans - accounted for a high portion of overall bad debts among the local lenders.
A large part of the bad debts was loans given to the property sector. A local bank even reported the value of realty loans shot up to 70% of its total outstanding loans as of the end of last year.
Another report by the branch showed that the Vietnam Bank for Agriculture and Rural Development, or Agribank, had the highest ratio of bad debts, at over 15 percent out of the 4 state-owned commercial banks.
Meanwhile, the average ratio of non-performing loans of commercial joint stock banks in the city was 2.59 percent.
In contrast, commercial joint stock banks whose headquarters are located outside HCMC posted the figure at more than 26 percent.
Also, finance companies in the city suffered a 16.97 percent ratio for the non-performing loans while the figure for finance leasing companies was 23.31% as of end-November in 2011.
However, people credit funds at the end of November last year recorded a bad debt ratio of only 5.46 percent.
The city’s credit institutions reported their total bad debts in the primary market servicing residents and organizations at 3.85 percent at the end of last November. The statistics by the HCMC Branch pointed out that most banks enjoying low profits or mired in losses or high bad debt rates had been involved in real estate-related loans.
The central bank affirmed that credit activities of the banking system this year would continue to face unexpected risks as uncertainties of the property market and local enterprises remained unpredictable.
Therefore, the branch urged local banks to closely supervise bad debts and give out appropriate solutions.
Also, the branch requested its members to handle and minimize bad debts as well as ensure the bad debt ratio at less than 5 percent of total outstanding balances.
In addition to credit risks caused by increasing bad debts, the branch proposed credit institutions strictly manage term risks.
“It is very difficult to adjust the structure of short-term deposits in sync with long-term loans and thus the capital usage at small commercial lenders has been burdened with heavy pressure for fear of term risks,” the branch explained in its report.
Recent statistics from the branch revealed that total debts relating to non-productive sectors including consumer credits, real estate loans and loans for securities as of September 30 last year made up 18.57 percent of total outstanding balances, down 0.03 percent from the beginning of the same year.
The total mobilized deposits in the city as of December 31 last year reached VND888.9 trillion, up 10 percent year-on-year while the credit growth at the year’s end was estimated at 6.3 percent against 2010.
