Vietnam’s bad debt ratio surges to 6.9% as Covid casts shadow: SBV
Non-performing loans (NPLs) have been rising in Vietnam’s banking system, currently accounting for 6.9% of total lending, a central bank official says.
The NPLs include on-balance-sheet debt, debt sold to the central bank-run Vietnam Asset Management Company (VAMC), and rescheduled loans that are potentially convertible into bad debt, State Bank of Vietnam (SBV) Deputy Governor Dao Minh Tu said at a Tuesday press meet.
On-balance-sheet sour loans now account for around 5% of total lending, he added.
The official attributed the rise in bad debt to economic hardships derived from the Covid-19 pandemic.
![State Bank of Vietnam Deputy Governor Dao Minh Tu chairs the press meet in Hanoi, July 23, 2024. Photo courtesy of SBV.](https://i.ex-cdn.com/theinvestor.vn/files/content/2024/07/23/tu-sbv5-2150.jpg)
State Bank of Vietnam Deputy Governor Dao Minh Tu chairs the press meet in Hanoi, July 23, 2024. Photo courtesy of SBV.
He noted that under Project 689, the government aims to bring down the bad debt ratio to below 3% by the end of 2025. To meet this target, the SBV has requested banks to handle toxic loans aggressively.
SBV data shows that on-balance-sheet bad debt ratio stood at 4.55% as of end-2023, more than double the 2.03% at end-2022.
Tu said credit growth has been accelerating, rising by more than 6% over end-2023 as of June 28.
Meanwhile, the Vietnamese dong has depreciated circa 4.4% versus the U.S. dollar so far this year, lower than that of many regional currencies, he noted.
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