Bad debt handling is difficult because of COVID-19

State bank Recently, a report has been sent to the National Assembly on reviewing the implementation of Resolution No. 42/2017/QH14 on piloting bad debt settlement of credit institutions and proposing to improve the legal system on bad debt handling, finance guaranteed product.

According to the assessment, in the past time, the bad debt of the system of credit institutions has been handled and controlled and the bad debt ratio on the balance sheet has been maintained at less than 2%. As of December 31, 2021, the total bad debt on the balance sheet was 190.48 trillion VND, the bad debt ratio on the balance sheet of the system was 1.49%, a decrease compared to the time before the implementation of Resolution 42 (at As of July 31, 2017, the system’s on-balance sheet bad debt ratio was 2.51%).

Generally, for the period 2017-2021, the system of credit institutions handled VND 750.1 trillion of bad debts (in 2021 alone, VND 151.9 trillion can be handled). In which, risk provision is used (352.3 trillion dong, accounting for 47%), debt repayment customers (220.5 trillion dong, accounting for 29.4%), selling debt to VAMC (114.1 trillion dong) VND, accounting for 15.2%) and other forms of bad debt settlement (63.1 trillion VND, accounting for 8.4%).

For the real estate sector alone, as of December 31, 2021, the outstanding credit balance for this field was VND 2,076.7 trillion, accounting for 19.89% of the credit balance to the economy. Total bad debt for the sector real estate is 34.7 trillion dong, accounting for 18.4% of bad debt of the whole system, bad debt ratio in this field is 1.67%.

Consumer sector: Outstanding debt is 2,081.9 trillion dong, accounting for 19.9% ​​of outstanding credit to the economy. Total bad debt loans consumption is 48.65 trillion dong, accounting for 25.8% bad debt of the whole system; bad debt ratio in this sector is 2.34%.

Securities investment and trading: The total outstanding credit balance granted to customers for investment and stock trading is VND 10,934.3 billion, accounting for 0.1% of outstanding credit to the economy. Total bad debt is 2,140.5 billion dong, accounting for 1.13% bad debt of the whole system; NPL ratio in this sector is 19.57%.

The total outstanding credit balance granted to customers for investment and bond trading is VND 892.5 billion, accounting for 0.01% of outstanding credit to the economy. Total bad debt is 28.2 billion dong, accounting for 0.01% of bad debt of the whole system; bad debt ratio in this sector is 2.87%.

Meanwhile, in the BOT and BT sectors, the outstanding credit balance for BOT and BT projects is 114.3 trillion dong, accounting for 1.09% of the outstanding credit to the economy. The total bad debt for BOT and BT projects is 7.4 trillion VND, accounting for 3.92% of bad debt of the whole system; bad debt ratio in this sector is 6.48%.

Assessing the bad debt situation and handling bad debts of the banking system in the coming time, the State Bank believes that due to the impact of COVID-19, bad debts of banks will continue to increase in the near future. next. In addition, the epidemic has had a great impact on the financial situation of customers, leading to bad debt settlement results through the form of customers paying debts and handling collateral assets, especially financial assets. Real estate assets also face many difficulties in the background economy have not recovered.

In addition to the impact on asset quality deterioration, the complicated development of the COVID-19 epidemic also threatens to reduce the level of capital adequacy as well as the business results of credit institutions when they have to increase their provisioning. risk provisions.

Although in recent times, the business results of the credit institutions system have improved, but this result is mainly due to the efforts of banks to reduce costs and promote growth from the banks. service activities. Credit activities are still the main source of income for credit institutions, but the appearance of the COVID-19 pandemic at the end of 2019 has slowed the growth rate of interest income of credit institutions in the past year. recently.

In that context, it is forecasted that credit institutions may face difficulties in handling bad debts in general, bad debts identified under Resolution No. 42 in particular, and it is expected that bad debts of the banking industry may increase. increase in the near future.

“Although the bad debt ratio on the balance sheet of the credit institutions system is still under control below 2%, the difficulties of the economy as well as of businesses and people may clearly reveal themselves. sharper in the coming time, then, the bad debt ratio on the balance sheet is forecasted to continue to increase”. stated in the report of the State Bank.