State Audit names a series of inefficient investment banks with high bad debt

The 2024 consolidated audit results recently announced by the State Audit Office show many shortcomings in the operations of banking and financial institutions.

Bad debt of customers with outstanding credit balance of over 500 billion VND increased dramatically in some banks.

Bad debt increased dramatically

According to the State Audit Office's assessment, in 2023, the State Bank of Vietnam (SBV) proactively and flexibly implemented monetary policy, contributing to controlling inflation at 3.25%, stabilizing exchange rates and liquidity of the banking system, and supporting economic growth.

Financial, banking and insurance institutions basically ensure safety indicators, profitable business, and bad debt ratio on balance sheet below 3%.

However, the audit pointed out many worrying shortcomings and inadequacies. The State Audit pointed out that the credit structure was not in the right priority direction, the outstanding real estate credit balance at the end of 2023 increased by 11.8% compared to the end of 2022 (of which real estate investment increased by 35.4%, 2.5 times the general growth rate of the whole industry), credit quality tended to decline, posing many potential risks.

In particular, bad debt of the group of customers with outstanding credit balance of over 500 billion increased in both ratio and outstanding balance (mainly at SCB), in which the outstanding balance of this group of customers at Saigon Thuong Tin Commercial Joint Stock Bank increased by 536.2%, at the Bank for Foreign Trade of Vietnam ( Vietcombank ) increased by 110.8%.

The State Bank of Vietnam has adjusted the operating interest rates down four times, with reductions ranging from 0.5%/year to 2%/year. However, the gap between the average lending interest rate and the average deposit interest rate in 2023 is still over 4%.

At the end of the Interest Rate Support Program under Decree No. 31/2022/ND-CP dated May 20, 2022 of the Government , the amount of interest rate support only reached VND 1,216 billion (equal to 3.04% of the plan), some commercial banks supported interest rates that were not in accordance with regulations by VND 1.75 billion.

The State Bank has not yet developed and submitted to competent authorities for promulgation strategies and plans on gold market development, and has not intervened in a timely manner to stabilize the gold market according to regulations. Meanwhile, the coordination work of providing information and data from relevant ministries and branches to the State Bank to serve the development of the International Balance of Payments Forecast Report has been limited for many years and has not been resolved.

Ineffective financial investment

The State Audit also pointed out a number of ineffective or inefficient financial investment units.

The Bank for Agriculture and Rural Development (Agribank) has a financial leasing company I - Agribank (ALCI) with an accumulated loss of VND 783.1 billion as of December 31, 2023. Agribank has set aside 100% of the financial investment provision of VND 172.08 billion.

Agribank Financial Leasing Company II (ALCII) has been declared bankrupt and ceased operations, while Agribank has set aside 100% of its financial investment provision of more than VND294.4 billion at ALCII.

Investment of 10 billion VND in Vinaconex Transport JSC, but this company has stopped operating since 2015, Agribank also set aside 100% financial investment provision.

Audit results at some banks show that debt group classification is still inaccurate.

According to the State Audit, Co-opBank reduced group 1 debt by VND15.4 billion, group 3 by VND0.09 billion, group 4 by VND0.18 billion; increased group 2 debt by VND13.41 billion, group 5 by VND2.26 billion.

At Vietcombank, the decrease in group 1 debt is 24.06 billion VND, group 2 is 138.38 billion VND, group 4 is 57.15 billion VND; the increase in group 3 debt is 84.51 billion VND, group 5 is 135.08 billion VND.

In addition, banks also have errors in lending procedures. Typically, appraisals are sketchy, collateral assets are not periodically re-evaluated, disbursement documents/documents proving the purpose of capital use are lacking; post-loan inspection and supervision are also inadequate...

At the Social Policy Bank, there are still cases of lending to the wrong beneficiaries, lending beyond the limit, and supporting interest rates that are not in accordance with regulations. Some branches have a high rate of overdue debt and debt settlement compared to the average of the whole system.

Vietnamnet

Source: https://baohaiphongplus.vn/kiem-toan-nha-nuoc-neu-ten-loat-ngan-hang-dau-tu-kem-hieu-qua-no-xau-cao-416909.html