Brian Jeffrey
Overview of Bad Debts in the Banking Sector
By the end of December 2024, the Group-5 bad debts of 25 listed commercial banks amounted to VND118.915 trillion (approximately $4.75 billion), reflecting a 39.3% increase since the start of the year.
Exclusion of Some Banks
The bad debt figures noted do not include those from LPBank and VIBBank as they only provided aggregated non-performing loans (NPLs) without specifying details for each bad debt category.
Share of Group-5 Bad Debts
Analysis of financial reports from several commercial banks reveals that Group-5 NPLs dominate, making up the bulk of total bad debts, with some banks reporting that over 90% of their NPLs are classified in this group.
Significant Increases in Certain Banks
Notably, Techcombank and ABBank experienced sharp rises in Group-5 NPL ratios of 136.9% and 103%, respectively, from early 2024.
Techcombank’s Group-5 bad debts reached VND3.269 trillion, constituting 0.54% of its total loans, marking a 137% rise since early 2024. Loans for real estate ventures made up the largest portion of its lending at 30.88%.
In contrast, ABBank’s Group-5 bad debts rose by 103%, representing 57% of its total bad debts.
Other Banks with Notable Increases
Various banks saw substantial increases in Group-5 bad debts, including Saigonbank (72.41%), BacA Bank (73.4%), ACB (74%), Sacombank (81.36%), and KLB (82%).
Improvements in Some Banks
Conversely, SHB, NCB, and TPBank reported reductions in Group-5 bad debts. SHB saw a decrease of 3.67% to VND9.704 trillion, NCB by 3.49% to VND13.665 trillion, and TPBank by 0.28% to VND1.115 trillion. The reduction in NCB’s bad debts showcases its effective restructuring efforts aligned with the government’s 2021-2025 plan on addressing bad debts.
Minimal Increases in Selected Banks
Banks with the smallest upticks in Group-5 loans included VietABank (3%), VietBank (5.2%), PGBank, and SeABank (both 25%), and BVBank (29%).
State-Owned Banks Performance
The largest state-owned banks, Vietcombank, BIDV, and VietinBank, noted high NPL figures but did not show the most significant increases in Group-5 bad debts, recording rises of 30%, 49%, and 55%, respectively.
Central Bank’s Recommendations
The central bank has recommended strategies to manage bad debts, which include thorough assessments of borrowers’ repayment capabilities to avoid new bad debts and pressing existing debtors for repayments while expediting debt recovery processes.
Capital Mobilization Insights
Private and public data revealed that 26 commercial banks mobilized VND12.846 quadrillion in 2024, a 12.89% increase from 2023. Among them, the ‘big four’ state-owned banks (BIDV, Vietcombank, VietinBank, and Agribank) led in deposit values, with Agribank surpassing VND2 quadrillion in deposits for the first time, marking a 10% rise from 2023.
BIDV followed with VND1.929 quadrillion (up 14.47%), VietinBank with VND1.603 quadrillion (up 13.75%), and Vietcombank with VND1.515 quadrillion (up 8.13%).
The collective contribution of the big four amounted to 56% of the total capital mobilization across the 26 banks that disclosed their performance for the year.
