|Vietcombank started applying Basel II standards in July this year. — Photo Vietcombank|
HÀ NỘI — Việt Nam’s finance and banking sector has reduced its ratio of non-performing loans (NPLs) – including both NPLs owned by credit institutions and the Việt Nam Asset Management Company – from 17.2 per cent in 2012 to 6.7 per cent at the end of June 2018.
The assessment was made by analysts at the Bank for Investment and Development of Vietnam (BIDV)’s Research Centre.
According to analysts, the achievement was partly thanks to more reasonable credit growth. Annual credit growth rate in the 2011-17 period was 14.3 per cent, much lower than the 34 per cent rate recorded from 2006-10.
Liquidity at banks has been also stable in the past five years, with the loan-to-deposit ratio (LDR) declining from 98 per cent at the end of 2011 to 87 per cent at the end of 2017, while lending interest rates have gradually fallen and averaged 9.8 per cent from 2011-17, down from 12.3 per cent from 2006-10.
According to BIDV’s report, risk management capacity at commercial banks had improved significantly and banks were expected to meet Basel II standards by 2020 as part of the central bank’s plan. Basel II, which comprises minimum capital requirements, supervisory review and market discipline, aims to enhance competition and transparency in the banking system and make banks more resistant to market changes.