Bad debt trader VAMC makes record profit in 2022

The Vietnam Asset Management Company (VAMC) last year recorded a profit 10 times higher than the year it started trading debts at market value in 2017.

According the latest VAMC report, total revenue in 2022 reached more than VND1.2 trillion ($50.71 million), down about 60% compared to 2021 and about half of its plan for the year.

However, profit reached a record of VND165 billion ($6.97 million), rising by more than 36% compared to 2021 and exceeding 24% of its target. It is the second year in a row that VAMC has achieved a profit of more than VND100 billion ($4.23 million).

VAMC is a unique enterprise, established at the end of May 2013 under a prime ministerial decision with a mission to contribute to the quick settlement of bad debts in Vietnam.

It also aims to develop healthy finances, minimizing risks for credit institutions and businesses, and promoting reasonable credit growth for the economy.

The company's initial goal was to bring the bad debt ratio in the banking system to a safe level, and it conducted trading and dealing with bad debts with special bonds. From 2017, VAMC started implementing debt trading activities at market value. By the end of this May, the company had bought 400 debts for nearly VND13 trillion ($549 million).

Before 2016, the company only made a revenue from management fees, and debt recovery bought with special bonds made no profit. Since 2017, VAMC has been able to balance revenue and expenditure and enjoy increasingly higher profits without using the state budget to deal with bad debts.

Also in 2017, it was allowed to increase its charter capital from VND500 billion ($21.7 million) to VND2 trillion ($86.9 million). In 2019, charter capital was raised to VND5 trillion ($217.3 million) with an orientation to reach VND10 trillion ($343.7 million) in the future to improve capacity and efficiency in debt settlement according to market value.

VAMC is now cooperating comprehensively with BIDV, Vietinbank, Agribank, Sacombank, PVCombank, NamABank and SGBank.

It also noted that the company faced difficulties when the State Bank of Vietnam's Circular 01/2020 changed the debt sale plan of credit institutions as the bad debt ratio was below 3%. At the same time, the central bank's adjustment of credit room at the end of last year reduced the demand for selling debt for payment by special bonds compared to previous years. VAMC also has difficulties finding debt buyers when the local macroeconomic situation is volatile.

In 2023, VAMC plans to buy bad debt with special bonds up to VND12 trillion ($521.7 million) and buy bad debt at market value of more than VND2.7 trillion ($117.3 million), and handle debt recovery of VND14 trillion ($608.6 million).