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Banking & Finance

BIDV's bad debts up 30% in 1H

Released at: 14:17, 03/08/2016

BIDV's bad debts up 30% in 1H

Photo: Duc Anh

$135 million added to bad debts since December 31, 2015.

by Hung Khanh

Total bad debts held by Vietnam’s largest bank, the Bank for Investment and Development of Vietnam (BIDV), have increased over the last six months and now pose a greater risk for the bank, its first half report reveals.

Its bad debts stood at VND13 trillion ($582.79 million) by the end of June, VND3 trillion ($134.44 million) higher than on December 31, 2015. “The figure has increased 31 per cent since December,” the report stated.

Of this, about half have been classified as non-performing loans, totaling VND6.3 trillion ($282.42 million), which are “unable to be retrieved”. Another VND2.3 trillion ($103.1 million), or 18 per cent, was classified as “doubtful” and may become bad debts at some point in the future.

BIDV’s risk provision was therefore reported at VND4.52 trillion ($202.63 million), an increase of 30 per cent against December 31.

Total assets reached VND930 trillion ($41.7 billion), 9.3 per cent higher than December 31, remaining unchanged as the highest in Vietnam’s banking sector.

Pre-tax profit in the first half was VND3.31 trillion ($148.38 million), up 6.3 per cent year-on-year.

Banking services earned the most profit, of VND1.15 trillion ($51.55 million), 10 per cent higher than in the same period last year. Its foreign currency trading also saw impressive results, with profit at VND205 billion ($9.19 million), an increase of 300 per cent year-on-year.

Net profit from securities trading reached VND222 billion ($9.95 million), compared to a loss of VND134 of billion ($6 million) in the first half of last year. Net losses from securities investment were VND85 billion ($3.81 million) while it turned a profit of VND46 billion ($2.06 million) in the same period last year.

Net profit from other business activities fell significantly, standing at VND757 billion ($33.93 million) in the first half, down 37 per cent year-on-year.

Ratings agency Moody’s said in May that BIDV was among a number of Vietnamese banks that could be exposed to risks after providing loans to the Hoang Anh Gia Lai Group (HAGL). “BIDV has the largest exposure to HAGL among Vietnam’s banks, with loans and bonds comprising a high 27 per cent of the bank’s tangible common equity (TCE) at the end of March 2016,” Moody’s said. 

Short-term outstanding debt at BIDV in the first half reached VND362.48 trillion ($16.24 billion), 6 per cent higher than on December 31, while long-term outstanding debt reached VND209.92 trillion ($9.41 billion), 20 per cent higher.

In the first half BIDV set credit risk provisions of VND4.52 trillion ($202.63 million), 30 per cent higher than in the same period last year.

Its outstanding credit at the end of the second quarter totaled VND680 trillion ($30.48 billion), an increase of 8.3 per cent against the beginning of the year. Total capital mobilization from customers in the first half reached over VND747 trillion ($33.48 billion), up 13 per cent compared to December 31.

BIDV recently received some positive news, with its share being added to the VN30-Index in late July, while the Myanmar Government approved it opening a branch in the country with initial investment of $85 million.

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