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Bad debt is biggest threat for banks in 2012
The non-performing loans (NPL) and bad debt ratio have been increasing, which experts believe would badly affect the business results of banks in 2012.
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The ROE and ROA indexes of banks
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Most commercial banks have reported the better profits for the 2011 fiscal year than the year before, despite the big difficulties. Vietinbank, for example, in 2011 obtained the profit higher by 77.62 percent than 2010, Eximbank by 68.6 percent, SHB 50,82 percent and MBB 29,03 percent.
Habubank was the first bank which reported the loss of 42 billion dong for the fourth quarter of 2011, though it still could make profit in the whole year 2011. This could be seen as the signal of a more difficult period ahead.
Profits still good in 2011
The banks’ credit activities began showing differences when the State Bank loosened the credit growth rate limits for some banks at the end of 2011.
The Q4 finance reports released by banks show that CTG and MBB had relatively high credit growth rates of 25.25 percent and 31.26 percent. Meanwhile, ACB, EIB and VCB obtained the credit growth rates of 17-20 percent. Only Habubank saw the growth rate of minus (-)4.57 percent.
As for the capital mobilization, ACB, CTG, MBB and SHB had the capital mobilization growth rate of over 20 percent, while STB and EIB saw the capital mobilization decreases of 7.56 percent and 5.15 percent.
Though there were big differences in the credit growth rates of different banks, nearly all of them obtained good business result in 2011. The highest post tax profit which has been declared so far belongs to CTG – 5784 billion dong. The profits of other big banks were also very high: VCB 4527 billion dong, ACB 3193 billion dong, EIB 3051 billion dong, MB 2129 billion dong and Sacombank 2033 billion dong. The ROAs mostly were higher than 10 percent, while ROAs over 1 percent.
Some indexes show bad signs
Though commercial banks have reported big profits for 2011, some indexes can show the first bad signs.
The biggest problem now for banks is the weak liquidity. In 2011, for the first time in the history of the banking system, banks had to have mortgaged assets to borrow money in the interbank market. Meanwhile, some interbank loans have become overdue, which has forced banks to make provisions against the bad debts.
Most of the interbank loans have high values. Some banks have the interbank loans accounting for 10-20 percent of their total assets.
The NPL and second-group debts of commercial banks have increased sharply over the same period of the last year. The NPL ratio of the whole banking system climbed to 3.3 percent, higher than the 2.14 percent by the end of 2010.
Of the eight commercial banks, which have made public the Q4 finance reports, only VIetcombank had the NPL ratio decreasing slightly, while other banks all had the NPL ratios increasing rapidly. Habubank, for example, has seen the NPL ratio increasing from 2.39 percent in 2010 to 4.69 percent in 2011.
Meanwhile, the second-group debts have also increased. HBB, for example, has seen the ratio of the debt rising from 9.86 percent in 2010 to 13.34 percent in 2011, VCB from 5.27 percent to 8 percent, and MBB from 0.6 to 1.76 percent.
In the context of the economic growth slowdown, the lending risks have increased, while the credit growth has been limited, banks tend to increase the lending interest rates in order to cover risks. This has led to the increases in the profit margins in the credit activities.
The ratio of the net profit on the loans’ value in 2011 was much higher than in 2010, which partially can explain why the bank profit in 2011 was still high despite the credit growth rate limitation.
vietnamnet
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