Vietnam’s Agribank bad debts decline to 6 pct

Nguyen Ngoc Bao, Chairman of Vietnam Bank for Agriculture and Rural Development (Agribank) reported details on 2011 business operations of the bank in a press meeting on January 10.
As stated in some recent press meetings, bad debt of Agribank was the main content which the chairman concerned. Accordingly, till the middle of 2011, the bank’s bad debt was at the high ratio of 6.7%, higher over 2 times than the average level of the whole banking system (around 3%).

However, Agribank’s bad debt tended to go down, contrary with the upward trend of the whole system.

From the end of October to late last year, the bad debt of the whole banking sector increased from 3% to 3.39%. The SBV Governor had predicted that the ratio might be 3.8-3.9% in late 2011. At many commercial banks, the upward trend of bad debts was seen clearly through years. Meanwhile, the bad debt of Agribank fell from 6.7% in the middle of 2011 to 6% by the end.

In agriculture and rural areas, Agribank’s bad debt ratio remained low at less than 1.5%.

In the last half of 2011, credit of Agribank was boosted and generally grew 7% thanks to shifts in capital disbursement, especially lending for agriculture and rural areas surged around 14%. The ratio of loans for agriculture and rural areas of Agribank was raised from 60% to 70% equaling to 25 trillion dong (20 trillion dong transferred from consumer, property and securities lending) in 2011.

Last year Agribank set the limit of 5 trillion dong for lending to coffee sector, 5 trillion dong to purchase rice for export, and 3 trillion dong for seafood export. The credit limits were almost remaining.

However, the pressure of capital shortage still exists in agriculture and rural areas, but the chairman explained, mainly due to demand for medium and long term capital while Agribank’s deposits are mostly in short term. Its room for medium and long term lending was full with around 46%.

Capital adequacy ratio (CAR) of Agribank increased from below 6% in 2010 to 8% in late 2011, which is the current ruled ratio applied on Agribank only. (For other commercial banks, minimum CAR is ruled at 9%). – Vietbiz24

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

Posted by VBN on Jan 12 2012. 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