Vietnam's bad debt down to 2.9 pct in 2015

By March 16, 2016 | 01:19 am PT

Bad debt within the Vietnamese banking system fell to 2.9 percent of outstanding loans at the end of 2015 from 3.7 percent a year before, according to the annual financial report released on March 14 by the government's National Financial Supervisory Commission.

Bad debt was valued at 119.66 trillion dong ($5.38 billion), the commission said in its report, adding that loans increased 19.3 percent last year, accelerating from 14.3 percent in 2014.

It also indicated that non-performing loans at three commercial banks the State Bank of Vietnam took over last year accounted for 30.8 percent of bad debt across the banking system.

The central bank last year acquired loss-making lenders Global Petro Bank (GP Bank), Vietnam Construction Bank and Ocean Commercial Bank.

Since 2011, the central bank has been restructuring the banking system in order to ensure the system’s safety, making the number of commercial banks shrink from 15 to seven through mergers and acquisitions.

The government also established the Vietnam Asset Management Company in 2013 to help banks offload non-performing loans from their books.

With an eye towards keeping inflation at 3–3.5 percent while achieving an economic growth rate of about 7 percent in 2016, the central bank has asked commercial banks and other financial institutions to keep bad debt below 3 percent this year.

The central bank has also projected outstanding loans will grow from 18-20 percent this year.