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Bad debts make up 8.6% of money owed   2012-07-13 - VNS

The country's bad debt ratio amounted to VND202 trillion (US$9.6 billion), accounting for 8.6 per cent of the total outstanding credit, said Nguyen Huu Nghia, acting head inspector of the State Bank of Viet Nam (SBV).

Speaking at a press meeting held in Ha Noi yesterday, Nghia said reports from credit institutions showed that by the end of May, the bad debt ratio was VND117 trillion ($5.5 billion), accounting for 4.47 per cent of the total outstanding credit while SBV's results revealed the sum of $9.6 billion by the end of March.

He reported that the bad debts were mainly in industrial production and construction areas, as these have been seriously affected by the economic downturn.

Outstanding loans in the real estate sector by the end of May were VND197 trillion ($9.38 billion) while its bad debt was VND12 trillion ($571.4 million). Outstanding loans in the stock market by the end of May were $571.4 million with bad debts accounting for 4.1 per cent of the total.

The SBV also said bad debts which had high possibility of losing capital accounted for 40 per cent of total bad debts. However, these debts were protected by risk prevention funds and mortgaged assets.

He affirmed that SBV was researching how to establish a debt trading company but had yet to submit it to the Prime Minister as it had not been necessary to use VND100 trillion ($4.8 billion) to buy the bad debt.

He added that the company, if established, would have to use several financial tools to resolve the bad debt.

Banks slash loan rate

Some banks announced on Wednesday they would be cutting interest rates on existing loans from as high as 19 per cent down to 15 per cent, starting from July 15. The move follows a guideline issued by the State Bank of Viet Nam aimed at helping struggling businesses.

Vietinbank affirmed that it would cut rates to 15 per cent per year and even offered firms loans for working capital at 11-12 per cent.

Pham Huy Hung, chairman of Vietinbank said: "We will increase access to capital for priority sectors including agriculture, export, small and medium sized enterprises and supporting industries."

Vietinbank is implementing a programme to provide enterprises with loans to purchase rice for temporary stock with preferential loans at 10-11.5 per cent.

The Sai Gon – Ha Noi Bank (SHB) also officially decreased its annual interest rates for all previous loans to 15 per cent.

Nguyen Van Le, director general of SHB, said that even before the SBV's directive, the bank had reduced the rates to 15-16 per cent for about 5,500 loans and restructured debts for customers with total outstanding loans of VND8.5 trillion (US$404.8 million).

Loans with rates higher than 15 per cent still accounted for one-third of SHB's total outstanding loans, however Le said that SHB would reduce the rates of all loans to 15 per cent immediately.

Agribank has taken a step further by lowering rates to 13-15 per cent for its customers. It also said that for clients in financial difficulties, it would look at making further interest cuts and continue to provide loans for new and feasible projects.

Also on the day, Sai Gon Thuong Tin Bank (Sacombank) unveiled a low interest rate programme for corporate borrowers.

It has earmarked VND2 trillion ($96 million) for lending at 13 per cent.

Another $50 million will be earmarked in US dollar for import-export firms at rates starting at 4.5 per cent.

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