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Despite great profits, banks still have to focus on restructuring and improving financial capacity.

Deputy Governor of the State Bank of Vietnam Dao Minh Tu made the above instruction at a conference on deploying banking tasks in 2020 in Ho Chi Minh City on January 10.

Handling VND99,500 billion of bad debt

Speakingat the conference, Mr. Nguyen Hoang Minh, Deputy Director of Ho Chi Minh City State Bank, said that in 2020, banking operations will continue to be stable and grow in both size and efficiency. Currently, the network of credit institutions in the province has reached 2,138 units, including the head office, branches and transaction offices. In particular, credit institutions focus on developing and reorganizing effective operations, in line with the process of innovation and application of modern banking technology, innovation and improvement of management efficiency.

The total assets of credit institutions in the area increased by 13.59 percent compared to 2018, performance indicators including capital mobilization and credit increased by 13.5 percent and 14 percent, respectively.

In particular, bad debts are controlled and achieved positive settlement results. The total bad debt in the area accounted for 2.1 percent of the total outstanding loans, down from 2.64 percent in 2018. In particular, the group of 12 joint stock commercial banks with headquarters in Ho Chi Minh City has aproportion NPLs at1.63 percent.

Mr. Minh said that National Assembly Resolution No. 42 on dealing with bad debts has been effective, along with the growth of goods, real estate, and securities. Credit institutions in the locality control and handle bad debts well.

As a result, in 11 months of 2019, credit institutions in Ho Chi Minh City handled VND99,500 billion in bad debt. In which, debt collection in cash reached VND44,600 billion, accounting for 44.8 percent of the total bad debts handled and up 51percent compared to 2018.

Regarding business results, Mr. Minh said that although the interest rates are different, most of the credit institutions in the area withpositive business results and bad debts are controlled. Accordingly, in the first 11 months of 2018, the business results of credit institutions in the area equaled95 percent compared to the whole of 2018.

A number of credit institutions constantly improved their competitive position and built their brands in the domestic, regional and international financial markets such as Vietcombank, BIDV, VIB, and ACB. Of which the positive factor on extreme competition such as attracting customers with product utilities, discounting services by transaction style, communication culture.

Mr. Minh said that the banking service is growing with the expansion of public non-cash payment activities and consumer payment via e-wallets. Currently, the number of active cards in Ho Chi Minh City increased by 10.08 percent compared to the end of 2018; while the number of POS devices also increased by 30 percent.

The ATM system reached 3,891 units, up 0.6 percent compared to the end of 2018. The ATM network is being arranged and adjusted by credit institutions in the area to improve operational efficiency and in line with the trend ofnot using cash in association with the expansion and development of POS systems and other products and services. As a result, internet payment activities grew by nearly 19 percent for corporate customers and by over 26 percent for individual customers. Electronic payments also increased by 34.6 percent in sales.

Continue focusing on restructuring and handling bad debts

Speaking at the conference, Deputy Governor of the State Bank of Vietnam Dao Minh Tu said that in 2020, the banking sector in Ho Chi Minh City will maintain a positive growth rate and ensure the supply of capital for economic development. Especially, the HCMC banking industry has many solutions to approach businesses and support businesses. In which the connection program between banks and businesses has been a bright spot overthe past six years.

Ho Chi Minh City is the leading country in banking services, including monetary services, payment, foreign exchange, exchange rates.All achieved positive results, including an increase in the service proportion of banks.

Mr. Tu said, during the past year, the banking industry has been very aggressive in dealing with bad debts. The current bad debt ratio of the whole industry is 3.6 percent, much lower than 10.6 percent in 2016. By the end of 2020, this ratio will be reduced to below 3 percent.

Regarding the scheme of restructuring credit institutions, Mr. Tu said that the banks have performed very well. Accordingly, in 2019, all banks performed effectively, most of them are profitable, and even some banks have big profits, far exceeding the plan.

However, Mr. Tu said that despite banksgettinggreat interest, they must focus on restructuring and improving financial capacity. “Banks that implement restructuring projects are not positive, bad debt has not decreased much, so it is necessary to calculate retained earnings instead of dividends. It is necessary to focus on improving the quality of assets and financial capacity," the Deputy Governor said.