HANOI, Dec. 14 (Xinhua) -- Amid rising non-performing loans (NPLs), many banks in Vietnam have strongly increased their loan loss reserve (LLR) funds to readily face uncertainties in the future, local media reported Wednesday.
The move is a positive signal reflecting the preparation of banks for unpredictable fluctuations, local newspaper Vietnam News reported on Wednesday.
Banks reported a strong surge in NPLs in the third quarter of this year. Financial statements of 27 banks showed their on-balance sheet NPLs as of Sept. 30 amounted to nearly 129.8 trillion Vietnamese dong (about 5.5 billion U.S. dollars), up 28.4 percent against the figure earlier this year, according to the newspaper.
Of the total, potentially irrecoverable debts skyrocketed by 62.5 percent to 72.4 trillion Vietnamese dong (nearly 3.1 billion dollars), accounting for 55.8 percent of the total NPLs. To deal with the rising bad debts, 14 out of 27 banks strongly increased their LLR ratios in the first nine months of this year, the financial statements of banks showed.
Vietcombank topped the list with the highest LLR ratio of up to 402 percent, which means the bank has set aside 4.02 Vietnamese dong for every Vietnamese dong in bad debt. Other banks like VietinBank, BIDV and Military Bank have raised their LLR ratios to 250 percent, 214 percent and 208 percent, respectively.
Tran Thi Khanh Hien, head of VNDirect Securities Company's analysis division, said that though banks' bad debts increased in the third quarter, their provisions for defaulted loans were still well guaranteed and higher than that at the end of 2020 and 2021. It was a positive signal as banks have readily prepared for increasing bad debt risks in the future. ■
