Banks shoot to minimise risks, bad debt
HCM CITY — Commercial banks are striving to applying several risk control measures, essentially improving credit quality and reducing bad debt, as they confront a worsening problem with non-performing loans.
The problem of non-performing loans turning into dead loans is predicted to worsen this year, when enterprises face more difficulties in carrying out their production and business operations.
A senior official of Asia Commercial Bank (ACB) who did not want to be named said that the bad debt problem is threatening the entire banking industry, including the ACB.
It is a problem that is really difficult to solve, and consequently, the industry's credit quality in late 2011 had dipped from early in the year, he said.
For its part, ACB is determined to improve its debt collection this year, he told the Dau Tu (Vietnam Investment Review)
To effectively utilise the 17-per cent credit growth quota assigned by the central bank, the ACB will focus on loans to the retail sector, small and medium-sized enterprises and individual customers.
The bank will also pay more attention to supervision and management of the credit risk in order to minimise bad debts, the official said.
In 2011, the bad debt ratio of Vietcombankwas 2.03 per cent, lower than the 2.30 per cent allowed by its shareholders' council, according to general director Nguyen Phuoc Thanh.
This year, the bank has set a target of keep its bad debt ratio at less than 2.8 per cent, and will try to improve its debt collection.
To realise its target, Vietcombank will continue to control credit growth, particularly of medium and long-term loans and those in foreign currency, so as to align lending with the growth of capital resources, Thanh said.
He also said that Vietcombank would closely follow the central bank's policies and carefully watch its liquidity so as to come up with proper measures to reduce bad debts.
Tran Phuong Binh, general director of the DongA Joint Stock Commercial Bank, said that given the country's current hard economic situation, most enterprises were facing difficulties in their production and trading activities.
Therefore, banks cannot avoid facing difficult situations themselves, he said.
To minimise its risks, DongA Bank has always maintained tight control over its credit quality and used VND296 billion for its credit risk contingency fund in 2011.
The result was that the bank's bad debt in 2011 was just 1.69 per cent of total outstanding loans, but it was still higher than the ratio recorded in 2010, Binh said.
He said that this year, DongA plans to focus its lending on production and trading activities related to export. — VNS