According to the assessment of Vietnam Investment Credit Rating JSC (VIS Rating), the most important highlight in the Law amending and supplementing a number of articles of the Law on Credit Institutions is the restoration of the right to seize collateral assets (TSBĐ) - a mechanism that brought about clear effectiveness during the period when Resolution 42 (2017-2023) was still in effect.
During the period when Resolution 42 was in effect, the scale of bad debt handled each month increased to 65%, while the rate of customers paying off their debts increased from 23% to 36%, showing the clear effectiveness of the mechanism allowing banks to seize undisputed collateral.
However, since this resolution expires at the end of 2023, the asset recovery process has almost had to depend on customer cooperation or through lengthy litigation, causing debt recovery rates at many banks to decrease significantly.
In the first 6 months of 2024, half of the bad debt was handled mainly through debt write-offs and provisions, accounting for 30–40% of total equity – a ratio considered unsustainable.
In addition, the sluggish real estate market has caused income from debt settlement through risk provisions (write-off) to continue to decrease, accounting for only 27% in 2024, compared to 40% in the period 2021-2022. Meanwhile, the rate of bad debt files accepted for settlement by the court is still very low, according to the reflection of some banks such as VPB.
This revised law not only restores the mechanism for seizing collateral, but also empowers the State Bank of Vietnam (SBV) to provide special loans with 0% interest rates to credit institutions in difficulty – enabling SBV to intervene early and ensure system stability.
“The amended law will help improve the ability to recover bad debts, enhance asset quality and profitability, especially for retail banks that rarely lend to speculative segments,” VIS Rating commented.
Data from banks shows that, in the period from 2022 to 2025, the problem debt ratio at the group of banks including Asia Commercial Joint Stock Bank ( ACB ), Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank), Orient Commercial Joint Stock Bank (OCB), Vietnam International Commercial Joint Stock Bank (VIB), Vietnam Prosperity Joint Stock Commercial Bank (VPBank) and Military Commercial Joint Stock Bank (MB) increased from 1.6% to 2.2%. This increase mainly came from mortgaged home loans and loans to business households.
Although the liquidation of mortgaged housing assets has shown positive signs thanks to real demand, loans related to resort and speculative real estate are under pressure due to oversupply and cautious market sentiment.
VIS Rating experts expect that the Law amending and supplementing a number of articles of the Law on Credit Institutions will support banks' profits by improving debt settlement revenue and reducing operating costs. This will also be further boosted by the recovery of the real estate market in 2025.
Source: https://doanhnghiepvn.vn/kinh-te/tai-chinh-ngan-hang/lieu-thuoc-kip-thoi-giup-cac-ngan-hang-go-kho-trong-xu-ly-no-xau/20250628030456054
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