Non-performing loans of credit institutions stand at 1.96%

The information was announced at the Vietnam Banking Forum 2020 which was examining the restructuring and settlement of NPL and was held on September 30.

According to Deputy Governor of the State Bank of Vietnam Nguyen Kim Anh, the operation of the current credit institution system basically ensures safe ratios and limits. The quality of credit has also been improved with the NPL ratio on the balance sheets under control at less than 2%.

In addition, the scale, financial and governance capacity of credit institutions have also been enhanced while the cross-ownership, cross-investment and dominance of groups of shareholders and large holders have been handled.

After three years of implementing Resolution 42, NPL on the balance sheets of credit institutions have decreasedcontinuously year by year. Accordingly, the NPL ratio was 2.46% in 2016, 1.99% in 2017 and 1.89% in 2019.

According to the Vietnam Asset Management Company (VAMC), after Resolution No.42 on the settlement of NPL took effect, the company has bought VND94.3 trillion (US$4 billion) worth of NPL, 1.5 times higher than its total debt purchase in the 2013-2017 period.

VAMC also suggested the imminent completion of a legal framework on the debt purchasing market and the establishment of an association of asset management companies aimed at creating transparency regarding bad debts and collateral asset.