Irrecoverable debts make up more than half of bad debts

As of the end of this year’s first quarter, the banks held more than VND84.2 trillion ($3.66 billion) in bad debts, up 5.6 per cent against early 2019. The amount included VND46.4 trillion ($2 billion) of irrecoverable debts, up 4 per cent against the beginning of the year.

VietinBank has the most serious case of irrecoverable bad debts, with more than VND10.488 trillion ($456 million), up nearly 11 per cent against early this year. Previously, the bank’s irrecoverable debts sharply expanded by 45 per cent last year, from VND5.217 trillion ($226.8 million) in 2017 to VND9.47 trillion ($441.7 million).

Following VietinBank is BIDV with the irrecoverable debts of more than VND7.231 trillion ($314.4 million), although unlike the former, this is only a 1 per cent increase against early 2019. However, the rate is 22 per cent than in the same period last year.

Sacombank’s irrecoverable debts were VND5 trillion ($217.4 million), down 37 per cent on-year. Vietcombank and SHB also hold VND4.926 trillion ($214.2 million) and VND4 trillion ($173.9 million) in irrecoverable debts, respectively.

Techcombank, VPBank, and ACB also reported increasing irrecoverable debts in the first quarter with the rates of 36, 15, and 11 per cent, respectively.

Although Resolution No.42/2017/QH14 outlining the pilot resolution of the bad debts of credit organisations, banks have been still facing problems in the area. According to the banks, in addition to the unresolved bad debts, new debts amidst increasing credit volume carry the risk of becoming bad debts as well.

Last month, the State Audit Office of Vietnam (SAV) has recently published the audit plan on carrying out Resolution 42. Ho Duc Phoc, auditor general of the SAV, who approved the plan, said that the authority will assess the performance of bad debts resolution as well as investigate and supervise the banks’ activities to collect bad debts.

By auditing specific dossiers, the SAV will clarify what difficulties the banks are facing in resolving bad debts. As for VAMC, the authority will also assess the trading and resolution of bad debts and securities purchased from commercial banks.