On the afternoon of October 30, 2020 at the Government’s monthly press conference of October 2020, answering the reporters' questions about the resolution of non-performing loans (NPLs) after three years' implementation of Resolution No.42, Deputy Governor Nguyen Thi Hong of the State Bank of Vietnam (SBV) shared that over the past time, the resolution of NPLs has received a lot of attention by the Party, the Government and the National Assembly (NA), and thus has been carried out quite successfully, the obstacles and challenges in the process of resolving NPLs have been addressed.
Specifically, according to the statistics accumulated from August 15, 2017 (at the time of the effective date of Resolution No.42) to September 30, 2020, VND 312.3 trillion of bad debts had been resolved, of which VND 167.9 trillion of on-the-sheet bad debts (accounting for 53.8%), VND 74.9 trillion of off-the-sheet bad debts; while the amount of bad debts sold to Vietnam Asset Management Company (VAMC) under the form of special bonds reached VND 69.5 trillion.
Answering the reporters’ questions about the business performance results in the third quarter, of which the bad debts of 14/16 commercial banks rose by 30% on average; the reasons for the increase in NPLs and the SBV’s specific measures, particularly when Circular No.01 would end its effectiveness soon, Deputy Governor Nguyen Thi Hong stated that, in 9 months of 2020, the Covid-19 pandemic had developed complicatedly, caused seriously negative impacts on all aspects of the economy. The banks are in fact financial intermediaries, the depositors are enterprises and the people, and the borrowers are also enterprises and the people.
“When enterprises and the people encounter difficulties and their revenues reduce, the ability of debt service is affected. This is one of the reasons for the increase of bad debts”, the SBV Deputy Governor emphasized.
Moreover, another reason is the calculation method, in the context of the complicated developments of the Covid-19 pandemic, the economy is facing many difficulties, credit demand is not as high as that of the previous years; therefore, the ratio of bad debts over new loan outstanding also rises.
According to the SBV Deputy Governor, during the recent months, the SBV has proactively conducted various measures to remove difficulties for the production and business activities. The SBV promptly issued Circular No. 01/2020/TT-NHNN on rescheduling of debt payment, waiving and reducing the bank interest and fees, maintaining the debt groups which are affected by the Covid-19 pandemic. In addition, the SBV has requested the credit institutions to reschedule, waive and reduce the interest rates in order to remove the difficulties for enterprises and the people.
In the coming time, in case the Covid-19 pandemic continues to develop complicatedly, it may cause more difficulties for the enterprises, and the international trade, commercial and service operations may continue to be badly affected, resulting in a further increase of bad debts. Therefore, in order to be well prepared and control the bad debts, the SBV has assigned the functional entities to assess, forecast, analyze and prepare possible measures and solutions to respond to any situation and to ensure safety of the banking system.
Le Hang