20 banks and VAMC to be audited for bad debts performance

20 banks will be checked for their performance of resolving bad debts

The SAV has recently published an audit plan on carrying out Resolution No.42/2017/QH14 outlining the pilot resolution of bad debts of credit organisations. Auditor general of the SAV, Ho Duc Phoc, 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.

Accordingly, Vietinbank, BIDV, and Vietnam Asset Management Company (VAMC) will be audited. The 18 other joint-stock commercial banks are ABBank, ACB, BacABank, CBBank, Eximbank, GPBank, HDBank, NamABank, OCB, Sacombank, SeABank, SHB, Techcombank, VietCapitalBank, VIB, VietABank, VietBank, and VPBank.

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.

Previously, a report of the State Bank of Vietnam’s (SBV) Supervision Department stated that credit organisations solved a total of VND138.29 trillion ($6 billion) of bad debts between August 15, 2017 and June 30, 2018. This includes VND70.2 trillion ($3 billion) in their internal balance sheet, VND21.5 trillion ($934.8 million) on their external balance sheet, and VND46.4 trillion ($2 billion) of debts sold to VAMC in the form of special bonds.

Besides, local credit organisations utilised VND61.04 trillion ($2.65 billion) in provision to deal with the bad debts on their internal balance sheets.

Financial reports from the last fourth quarters showed that the volume of bad debts has fallen significantly against early last year, with the decrease reaching even 50 per cent at some banks.

According to the available financial reports (Vietcombank, Techcombank, VPBank, Sacombank, LienVietPostBank, VIB, MBBank, ACB, ABBank, TPBank, PGBank, BacABank, Saigonbank, Kienlongbank, VietBank) the total bad debts in 2018 was more than VND34.81 trillion ($1.51 billion), down 17 per cent on-year.

On the other hand, a large number of banks have yet to get ahead with their bad debts, leading to high provisions for risk. For instance, as of the end of 2018, VPBank’s bad debts stood at VND7.766 trillion ($337.7 million), down VND1.6 trillion ($69.6 million) against late last September 2018, but up 25 per cent against early last year. Agribank and Vietinbank are similar cases.