The bad debt rate of Vietnamese banks had surpassed 4% of total outstanding loans by the end of April this year.
In January this year, the bad debt rate of the Vietnamese banking system was 3.74%, which increased to 3.86% in February, 3.93% in March and 4.03% by the end of April this year.
Despite the government’s efforts, the bad debt rate of the Vietnamese banking system has continued rising over the past year, particularly after Vietnam Asset Management Company (VAMC) was put into operation. By June 15, VAMC had bought around VND47 trillion (USD2.23 billion) in bad debt from credit institutions.
According to Moody's, bad debt in the Vietnamese banking system accounts for at least 15% of total debt, a far cry from the State Bank of Vietnam's estimate.
However, the SBV contests Moody’s rating, saying that the "positive signs" along with the efforts of local banks have helped to ease the problem. According to the SBV, by the end of 2012, the rate of bad debt rate in the Vietnamese banking system increased to 4.73% as of October 2013, and reduced to 3.63% by late December. The state bank said that these numbers were calculated through standard accounting practices and continues to stand by them.