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Bad debt panorama: institutions’ figures unreliable, official statistics doubtful
The figures about bad debts have repeatedly appeared on mass media. However, no one can say for sure what figures are the most reliable since the statistics are quite different.
The participants at a recent workshop discussing how to deal with bad debts have once again affirmed that the bad debt is now a big problem of the banking system, but the bad debt ratios are not too serious and frightening.
However, they could not give the reasons to people to have confidence in their conclusions. The economists themselves admitted that they have to work on quite different statistics. How can one come to a conclusion about the seriousness of the bad debts, if he does not have reliable foundation?
The official figure released by the State Bank’s Governor Nguyen Van Binh at the National Assembly’s session showed that the bad debts accounted for 10 percent of the total outstanding loans of credit institutions.
Prior to that, the inspection and supervision agency belonging to the State Bank of Vietnam stated that the bad debt ratio was 8.6 percent.
The two figures were much higher than the 4 percent released by credit institutions in March.
The National Finance Supervision Council has reported the higher bad debt ratio of 11.6 percent.
However, all the figures released by the banks and government agencies were still lower than the 13 percent level released by a private credit rating firm recently.
Truong Dinh Tuyen, a well-known economist, former Minister of Trade, has affirmed: “I’m sure the bad debt ratio is not lower than 10 percent.” Meanwhile, the total outstanding loans provided to the national economy has reached 2.1 millions of billions of dong.
Mui has pointed out that a lot of banks have been trying to conceal their actual bad debt ratios by playing tricks. One of the tricks is that banks have changed the loans to enterprises into the capital contribution to the enterprises. As such, the sums of money appear on the account books as investment deals, but in fact, they are just “virtual” deals.
She went on to say that the bad debt has been increasing rapidly partially because of the problems in the professional ethics of credit officers. However, no one can count how many percentages of bad debts the officers “contributed” to “achievements” about bad debts.
Analysts have also commented that though the managers of banks know exactly about the banks’ bad debts, but they would never release the figures due to many reasons.
However, experts still have affirmed they have reasons to believe the bad debt situation is not too serious.
According to Mui, not all the bad debts of enterprises are the bank debts, and not all the bad debts of enterprises are the loans to enterprises. Meanwhile, “credit institutions” does not only mean “commercial banks,” but other non-bank finance institutions, including finance leasing companies, people’s funds and finance companies.
“A lot of finance leasing companies have very high bad debt ratios of 40-50 percent, which has pushed the bad debt ratio of the whole system up. However, these are not the bad debts of banks, so no need to worry about bad debts,” Mui explained.
Dr Duong Thu Huong, former Deputy Governor of the State Bank, former Deputy Chair of the National Assembly’s Economics – National Budget Committee, also said bad debt is an unavoidable part of banks, while the more important matter for discussion is how high the bad debt ratio should be.
Huong believes that bad debt, or the irrecoverable capital, has been “buried” under the unsold products of enterprises, compared as a “block of clotted blood” which has put the production and business activities at a standstill.
Therefore, Huong said, when enterprises can clear their inventories and boost sales, the bad debts would be decreasing.
vietnamnet
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