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"Endoscopy" of Vietnamese bank non-performing loans

The growth of outstanding loans and data from the third quarter of 2023 financial statements show that the banking industry's non-performing loans are likely not yet at their peak and banks' bad debt handling activities are still facing difficulties due to the stagnation of the real estate market.

List banks

Non-performing loan developments are very diverse

The difficult economic situation at home and abroad has caused non-performing loans in the banking system to increase sharply from the end of 2022 until now. However, the bad debt developments of banks are very diverse, based on each bank's target customer orientation and business strategy.

Considering 27/29 commercial banks listed on the stock exchange, the non-performing loans ratio in the third quarter of 2023 increased from 2.09% to 2.24%. If we observe the relationship between the ratio of bad debt (debt from group 3 or higher) and overdue debt (debt from group 2 or higher), the increase in overdue debt is much faster than that of bad debt in recent quarters. This. The positive point is that overdue debts began to cool down in the third quarter, but in the context of the economy's still weak demand, there is a high possibility that the proportion of overdue debts converted to bad debts will continue. continued to increase in this fourth quarter.

To see the implications of the non-performing loans picture of the third quarter, the author grouped banks based on the characteristics of each group. A total of 27 listed banks are divided into two groups: state-owned banks and private banks. In particular, the private banking group is divided into 3, including banks with a high proportion of retail loans, banks with a high proportion of corporate loans, and banks with a small asset scale. more (see picture).

Differences in non-performing loans between banking groups

While non-performing loans in the group of state-owned commercial banks and commercial banks specializing in retail lending began to remain stable, bad debt in private commercial banks lending to businesses increased sharply. If at the end of 2021, the bad debt ratio of private banks specializing in corporate loans is only approximately that of state-owned banks (about 1.4%), then by the end of the third quarter of 2023, the difference between the two groups is much larger (2.3% versus 1.4%).

Non-performing loan

For the private commercial banking group specializing in retail lending, after bad debt increased rapidly in the first two quarters of 2023, it began to be controlled in the third quarter. One point to note is that the group of private banks specializing in business loans are also the banks with high credit growth since the beginning of the year and a large proportion of outstanding loans are poured into businesses in this sector. real estate business.

The remaining group of commercial banks had non-performing loans that increased rapidly in the first 2 quarters of the year but began to stabilize and decrease slightly in the third quarter because many banks have paid off some bad debts from their off-balance sheet ( sell debt).

Non-performing loan of Vietnamese bank

Consider the group of banks with state capital

Banks with state capital have their non-performing loan ratio increase the least in the third quarter of 2023. However, while VietinBank and BIDV's bad debt increased slightly, Vietcombank's bad debt increased sharply. Vietcombank's bad debt level has increased from 0.82% to 1.21% (by the end of 2022 it will be 0.68%). This bank maintains a low credit growth rate, only 3.9% as of the end of the third quarter of 2023, compared to the first limit (room) granted by the State Bank from the beginning of the year of 9.6% and the limit whole year level is at least 12% (according to forecasts of VNDIRECT Securities Company).

VietinBank and BIDV have much better credit growth in the first 9 months of 2023 than Vietcombank when reaching 8.7% and 8.4% respectively, equal to the credit room level that the State Bank first granted. Growth in the wholesale segment is still a big driving force for these banks.

Consider a private banking group that specializes in retail lending

After a sharp increase in the second quarter, non-performing loans of private banks specializing in retail lending began to maintain stability in the third quarter of 2023, typically HDBank and VPBank.

The bank with the highest bad debt growth in the third quarter of this group is TPBank, from 0.84% ​​at the end of 2022 to 2.2% at the end of the second quarter of 2023 and 3% at the end of the third quarter of 2023. In addition, TPBank's loan loss reserve ratio (LLR) decreased from 135% in 2022 to 47% at the end of the third quarter of 2023 - the lowest level in the past 10 years.

ACB also has a significantly increased bad debt ratio, from 1.07% at the end of the second quarter of 2023 to 1.21% at the end of the third quarter of 2023. ACB's credit recovered strongly in the third quarter, after a period of cautious lending in the first 6 months of the year, and the Bank's profit also improved significantly compared to the second quarter. Profits improved when ACB's net interest margin (NIM) remained stable in the context of the industry's average NIM decline, giving the Bank more room to make credit provisions.

Consider a group of private banks that specialize in corporate lending

Private banks specializing in business loans all have a significant increase in bad debt ratio in the third quarter of 2023, with the common characteristic of the group being that outstanding loans to real estate businesses account for a high proportion. Some banks with very high growth rates in real estate business loans as of the end of the third quarter compared to the beginning of the year are SHB (more than 100%), Techcombank (more than 50%), and MBBank (more than 50%).

The most important point for this banking group is that bad debt may continue to increase in the coming quarters when the overdue debt rate of banks is increasing rapidly. The group's bad debt ratio is 1.35%, while the overdue debt ratio is up to 5.3%.

Consider the remaining group of private banks

For the remaining group of banks, bad debt as of the end of the third quarter decreased significantly compared to the end of the second quarter. The two banks with the highest decrease in bad debt ratio are ABBank (from 4.5% to 3.5%) and Eximbank (from 2.75% to 2.64%).

The large level of provisioning this year caused banks' business performance to decline significantly compared to the same period last year.

The most difficult period has passed, but non-performing loan risks still exist

Credit growth across the industry is low, but credit to the real estate business group has increased, while real estate demand is still low, showing that some additional disbursed loans may not go into production and business. , but only serves the business's need to resolve liquidity, or repay previous loans.

In the context of the difficult real estate market, banking groups with a high proportion of credit allocation to the real estate business group may face bad debt risks that will continue to increase shortly. Banks will also face a lot of pressure in resolving bad debts, as most of the collateral assets held by banks are real estate.

The banking industry has difficulty liquidating collateral assets, even though the collateral assets have a significant discount compared to the previous market price. Profits in the fourth quarter of this year and the first quarter of next year are likely to continue to be "eroded" by bad debt pressure (due to increased provisioning). This is the period when banks must balance issues such as business growth, risk management, maintaining profits, and customer support.

(Theo Dau tu chung khoan)


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