Thursday, December 1, 2022 5:21:40 PM - Markets open
VN-INDEX 1,036.28 -12.14/-1.16%
HNX-INDEX 211.00 +2.21/+1.06%
UPCOM-INDEX 71.41 +0.54/+0.76%
Banks’ asset quality to remain safe thanks to large reserve buffers
Vietnamnews - 6/10/2022 2:31:29 PM
 (0 ratings. You must sign in to rate.)
Despite difficulties due to high inflation, declining net interest income (NIM) and rising bad debts, analysts say Vietnamese banks can overcome risks related asset quality thanks to their large reserve buffers and tight control in lending highly risky areas.
In a recent report, analysts at VNDirect Securities Company said the asset quality of banks has been somewhat affected due to impacts of the COVID-19 pandemic, of which the average non-performing loan ratio (NPL) in the first quarter of 2022 increased while the loan loss reserve (LLR) ratio decreased slightly compared to the end of the fourth quarter of 2021.
Specifically, the average NPL ratio increased to 1.5 per cent at the end of Q1 2022 from 1.39 per cent at the end of Q4 2021, of which the potentially irrecoverable debts increased slightly to 0.58 per cent from 0.51 per cent.
Total outstanding loans of 15 listed banks by the end of Q1 2022 increased by 6.7 per cent compared to the beginning of the year while bad debts increased by 11.4 per cent. The five banks with the lowest NPL ratio include Techcombank (0.67 per cent), Vietcombank (0.81 per cent), ACB (0.82 per cent) and MBBank (0.99 per cent).
The increase in bad debt in the coming months is also noteworthy when Circular 14, which allows banks to reschedule the payment time of COVID-19 affected debts, will expire at the end of June 2022. According to the SBV, if including the rescheduled debts and those sold to the Vietnam Asset Management Company (VAMC), the bad debt ratio of the banking system could reach up to 7.3 per cent, equivalent to that in the 2016-17 period.
However, VNDirect Securities Company’s analysts believe banks will be able to minimise the risk of a bad debt increase in the near future thanks to their solid asset quality and strong provision buffers.
The analysts explained the asset quality of banks has improved strongly compared to the 2016-17 period as banks have made high provisions for risky debts to avoid a bad debt increase. The LLR at most banks also hit an all-time high by the end of 2021.
In addition, an increase in capital adequacy ratio (CAR) has also helped banks improve their asset quality. The capital hike will continue to be the top priority goal of many banks in the remaining months of 2022, especially State-owned banks, to prepare for the application of international banking safety standards Basel III.
The banking industry will also benefit from the country’s strong export growth, recovery in demand and support from fiscal policies in 2022, the analysts said.
The analysts estimated although net profit margin is unlikely to improve due to higher deposit rates, banks will still record high profit growth of 29 per cent and return on equity (ROE) of 22 per cent in 2022 based on high credit growth, stable service fees and well-controlled credit costs.
State-owned banks can further increase the current account savings accounts (CASA) to lower their funding costs thanks to a reduction in money transfer and account management fees to attract more customers. — VNS
Read original article here
Newer News
29/11 VPBank receives loans from large financial institutions, affirming its reputation
29/11 Banks gain big profits from forex trading
29/10 Most banks expect better business performance in 2022
24/10 Challenges for banks in recovering bad debts
13/10 Increased pressure to raise interest rates
07/10 Investors warned of the possibility of corporate bond default
28/09 Commercial banks raise deposit rates after SBV’s adjustment
28/09 Foreign investment disbursement hits record high in nine months
23/09 Reference exchange rate up 8 VND
17/09 MoF proposes to reduce fees by up to 50 per cent to support transport sector
Older News
10/06 Reference exchange rate up 3 VND on June 10
06/06 Reference exchange rate down 7 VND at week’s beginning
30/05 Banks told to rollout low-interest businesses loans
20/05 Vietnamese banks expected to get better credit ratings
18/05 Reference exchange rate down 20 VND
16/05 Reference exchange rate down 3 VND at week’s beginning
11/05 Reference exchange rate down 2 VND
09/05 Banks plan to increase charter capital to 2.8 billion USD in 2022
05/05 Reference exchange rate stays stable
04/05 Reference exchange rate down 12 VND after holidays
Newsletter Signup
Top Stories
Banks gain big profits from forex trading
Pharmaceutical firms report positive results in Q3
Petrol prices surge in latest adjustment
Investors worried as speculative stocks plummet
Bank stocks hit by corporate bonds maturity
Market Update
Last updated at 3:05:03 PM
VN-INDEX 1,036.28 -12.14/-1.16%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.