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Vietnam’s banks gather strength in face of rising bad loans
Vietnam’s banking sector gained strength in June, with both assets and profitability rising from a month earlier, while the ratio of short-term funds used to finance longer term loans fell, the central bank said on Friday.
State-controlled banks account for the bulk of lending, and bad debt, put at 8.6 percent of total loans at the end of March, has risen as economic growth has slowed.
As of June 30 the banking sector’s total assets stood at 4.906 trillion dong ($235.4 billion), up around 0.4 percent from May 31, State Bank of Vietnam data seen by Reuters on Friday showed.
Banks raised their registered capital to nearly 384.9 trillion dong at the end of June, up 0.8 percent from the end of May.
Their return on assets (ROA) edged up to 0.39 percent from 0.30 percent on March 31, and the return on equity (ROE) also rose to 3.96 percent from 3.06 percent at the end of March.
Banks have used 14.47 percent of their short-term deposits to fund medium and long-term loans as of June, down from 14.86 percent a month ago, the central bank said.
It was unclear if the data had been independently audited. Most lenders in Vietnam’s banking system are not listed and therefore are not required to publish their audited results on quarterly basis.
There are three fully state-owned banks, namely Agribank, the country’s largest by assets, and two policy lenders, providing loans for major state projects and socio-economic programmes. Out of 39 partly private banks, nine are listed and there are five 100-percent foreign owned banks.
The central bank data also covers four joint venture banks, 29 financial and leasing firms and close to 1,100 small credit funds.
The outstanding loans in Vietnam’s banking system contracted 0.03 percent as of July 20 from the end of last year, while money supply rose 8.58 percent in the period, the government said on Tuesday.
Vietnam’s economic growth was expected to pick up more quickly in coming months, ANZ said in a monthly research for July, though it remained concerned about downside risks.
“Those risks come from both the unfavourable global growth environment and the slower-than-expected rate of domestic credit expansion that has affected industrial manufacturing – the country’s core economic activity,” ANZ’s analyst Hai Pham said in the report sent to Reuters late on Thursday.
The economy grew 4.31 percent year-on-year in the first half of 2012, compared with 5.57 percent growth in the first half of 2011. ($1=20,840 dong
Reuter
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