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Vietnamese central bank determined to keep bad debt ratio below 3 pct

By June 30, 2016 | 12:49 am PT

The State Bank of Vietnam on Wednesday reaffirmed its commitment to keep the bad debt ratio at less than 3 percent of outstanding loans in 2016.

The central bank asked relevant authorities to continue taking drastic measures to keep bad debt under control.

Le Minh Hung, the bank's governor, has approved an action plan, asking the banking sector to help improve Vietnam's business environment, enhance national competitiveness and support businesses during 2016-2017 with a vision to 2020, according to the central bank's online portal.

The governor urged improvements to credit information transparency, and reviewing and finalizing a legal framework on lending.

The plan also emphasizes the urgent need to restructure the banking system with a focus on handling bad debt over the next four years.

The central bank started restructuring the banking system in 2011 to ensure the safety of the system, reducing the number of commercial banks to 34 from 42 through mergers and acquisitions.

The government also established the Vietnam Asset Management Company in 2012 to help banks offload non-performing loans or toxic debts from their books.

Bad debt in the Vietnamese banking system stood at 2.9 percent in 2015, significantly down from 3.7 percent the year before, according to an annual financial report published by the National Financial Supervisory Commission.

>Vietnam's bad debt down to 2.9 pct in 2015

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