Vietcombank voices to make its bad debts ratio transparent

Vietcombank’s high bad debt ratio was attributable to the fact that the bank has been applying international auditing standards (IAS) in evaluating bad debts.

Vietcombank’s high bad debt ratio was attributable to the fact that the bank has been applying international auditing standards (IAS) in evaluating bad debts, Nguyen Van Tuan, Vietcombank’s deputy CEO told the local online newspaper Dien Dan Doanh Nghiep.

Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank) recently released its financial statements for Q3/2011, in which the bank posted its NPL ratio of 3.90%, the highest among local commercial banks. However, the bank’s deputy CEO made it clear that high bad debt figure lied in different evaluation standards applied for local banks.

At Vietcombank, loans are classified as special-mention loans as soon as borrowers’ businesses show signs of weakening but not until they are overdue like other banks, Tuan said, adding that Vietcombank always tried to give out the figures honestly, openly and publicly to its customers, enterprises and investors.

When all banks apply the same loan classification and evaluation standards, Tuan said, Vietcombank may not lead the whole banking system in bad debts.

High bad debt ratio of Vietcombank was partly due to the bank’s prudence in reserving for loan losses, Tuan said, specifying that the bank currently set aside VND8 trillion in provisions for credit losses. VCB’s bad debt ratio is likely to be lower at year end when the bank uses a portion of its credit risk provisions to clear bad debts, Tuan added.

Source Sophie/ StoxPlus

Tags: Vietcombank, Vietnam banking industry, Vietnam finance, Vietnam financial

Posted by VBN on Nov 10 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry