HÀ NỘI – Settlement of bad debts has shown positive signs after some banks announced they would buy back all their non-performing loans they sold to the Việt Nam Asset Management Company (VAMC).

At a meeting yesterday, Vietinbank chairman Nguyễn Văn Thắng said that in 2017 his bank would focus on settling bad debts and would buy all bad debts that it sold to VAMC.

In the context of fierce competition among banks, Vietinbank would completely settle the bad debts in 2017 instead of 2018 as planned earlier, Thắng said.

From 2007 to 2010, Vietinbank settled nearly VNĐ10 trillion (US$440.52 million) of bad debts through a provision of risk loans as well as recoupment and sales of bad debts.

By the end of 2016, Vietinbank’s bad debt ratio was kept under 1 per cent. The bank’s outstanding loans in 2016 reached VNĐ720 trillion, up 18 per cent against 2015.

Vietinbank posted a profit of VNĐ8.25 trillion in 2016, up 12 per cent against 2015, while its total assets by the end of 2016 also surged by 22 per cent to VNĐ947 trillion.

Earlier, Vietcombank’s chairman Nghiêm Xuân Thành had also said that in 2017, his bank would buy all VNĐ4.3 trillion of NPLs that it sold to VAMC, three years sooner than as planned.

Thành said that Vietcombank would settle bad debts itself through the use of provision, hoping that as and when the bad debts are recouped the bank’s financial capacity would improve, helping it continuously to cut lending interest rates.

At the meeting with Vietcombank last week, Governor of the State Bank of Việt Nam Lê Minh Hưng told Vietcombank to focus on settling NPLs through the sale of mortgaged assets.

Hưng said Vietcombank made significant achievements last year in settling bad debts, which has brought its bad debt ratio down to 1.45 per cent, but these settlements were mainly through provisions, which reduced the bank’s profits. Last year, Vietcombank spent around VNĐ8.2 trillion for provisions, which equalled 121 per cent of its total NPLs. The bank’s pre-tax profit hit a record high of VNĐ8.212 trillion in 2016, up 23.4 per cent against 2015.

The Governor also instructed the bank to prioritise the completion of its restructuring project and determine its position in the region in the next five to 10 years.

The bank will also have to take part in the restructuring of other ailing banks, but the Government would issue detailed policies in this regard to ensure the bank is not affected by it, Hưng said.

Nguyễn Đức Kiên, deputy head of the National Assembly’s Economic Committee, said that the move of buying back bad debts showed that the business performance of the banks has been better.

With the move, Kiên said, the pledge to settle bad debts of credit institutions with the use of the State budget at a minimum is becoming a reality. – VNS