Groundhog day with banks’ bad debts

Albeit the bank’s provision amount in the third quarter fell more than 23 per cent against that in second quarter to VN113.96 billion ($5.4 million), its cumulative provision amount in the year to the end of September climbed to VND484 billion ($23 million).

According to the bank’s new chairman Pham Huu Phu, surging bad debts have eaten into the bank’s full-year profit which could slide to VND2.8 trillion ($133 million) instead of a proposed VND3.4 trillion ($162 million) approved at the bank’s 2012 general annual shareholders meeting.

At Navibank, its bad debt rate roared to 3.97 per cent late in the third quarter in the face of falling credit growth, making the bank to put over VND6.2 billion ($2.9 million) into third quarter provisions. Its cumulative provision amounted to VND31 billion ($14.7 million) in the first nine months.

Consequently, the bank’s after-tax profit plunged to VND6.57 billion ($3.1 million) in the third quarter, down 87 per cent on-year and reached VND98 billion ($4.6 million) in the first nine months, shedding 33.5 per cent on-year.

In the year to the end of September, DaiA Bank had a bad debt provision of VND120.4 billion ($5.7 million) from $68.7 billion ($3.27 million) at the end of 2011.

Its third quarter after-tax profit was halved compared to one year ago falling to VND61 billion ($2.9 million) and came to VND225.4 billion ($10.7 million) in the first nine months, sliding 21 per cent on-year.

Also during the period,  the bank eyed 15.8 per cent hike in raising amount versus 11.6 per cent growth in lending amount.

Soaring provision led to a sharp decline in LienVietPostBank profits in the year to date.

Particularly, in the third quarter alone, the bank’s provision came to VND82.1 billion ($3.9 million) against VND12.4 billion ($590,470) at the end of 2011, jumping almost seven-fold.

As of September 30, 2012 the debt facing default at the bank hit VND243.8 billion ($11.6 million) against  $4.48 billion ($213,000) one year ago.

The bank’s profit then fell 24.6 per cent on-year to VND73.8 billion ($3.5 million) in the first three quarters of 2012.

Though banking giants VietinBank and Vietcombank witnessed falling provision in the third quarter, their cumulative provision amounts during January-September had spiked compared to one year ago, VietinBank reportedly put VND2.751 trillion ($131 million) on provision for the period, up 26 per cent whereas that of Vietcombank hiked 52 per cent on-year.

Debt amounts facing default at Vietcombank climbed to VND3.211 trillion ($153 million) in the first nine months, surging 41 per cent against the end of 2011.

“Banks’ bad debts are clotted blood which must be shortly tackled through radical measure packages to promote lending and rescue struggling firms in a timely manner,” said National Financial and Monetary Policy Council member Dr. Tran Du Lich.