Non-production loans of 16 hcmc-based banks estimated at 18.28% total loans

As of July 5, non-production loans of 16 Ho Chi Minh-based commercial banks were estimated at VND 88.641 trillion, making up of 18.28% total outstanding loans, said the central bank’s municipal branch.

The highest proportion of non-production loans was seen at Nam A Bank (21.9%), followed by OceanBank (21.6%) , ABBank (21.53%) and VietABank (21.37%), it added.

Thereby, all the banks in the city managed to cut their outstanding loans for manufacturing sectors (property, securities, consumption) to below 22% of total loans by June 30 as requested by the State Bank of Vietnam (SBV).

Some people doubted that these commercial banks might have “taken actions” to protect themselves from the SBV’s punishment of doubling reserve requirements, local media reported, reasoning that within 10-15 days, it’s very hard for them to collect non-production loans and rapidly cut outstanding loans for nonmanufacturing sectors with the average maturity of 5-7 years.

Commercial banks rushed to cut nonproduction loans in time at any expenses in order to help them not to double reserve requirement; and avoid difficulties in network expansion, company establishment, reputation and brand name development thereafter, Ho Huu Hanh, Director of the SBV’s HCMC branch said.

However, by applying the tricks to meet the SBV’s requirement in time, commercial banks may boost up risks of bad debts, hampering credit quality, Hanh was concerned.

If the banks managed to pull down nonproduction loans to 22% of total loans by June 30, it is likely that they would find it not difficult to cut the proportion to 16% by the end of this year, a banker said, reasoning that borrowing demand of local enterprises tend to mount up in the year-end peak season which helps them raise outstanding production loans. – Stoxplus.com

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial