Bad debts of financial companies rise 12.38 per cent

According to figures given by the State Bank of Vietnam’s Ho Chi Minh City branch, bad debts of credit institutions in the city amounted to 4.3 per cent in January, down from a previous 4.79 per cent in December.

However, bad debts of foreign companies rose to 1.14 per cent from 1.06 per cent, and of financial companies to 12.38 per cent from 11.26 per cent, while other sectors saw a slight drop in bad debts. This is the second consecutive month that bad debts of financial companies climbed.

Experts say that because of credit to non-production businesses, commercial banks tightened personal credit which had helped financial companies promote consumer loans. However, as the economy was still affected by inflation and income of the common man had not risen, financial firms increased unsecured loans creating high credit risk and caused a sharp rise in bad debts, especially when financial firms offered unsecured loans at a high interest rate of 25-30 per cent per annum.

By Diu Ngan – Translated by Thuy Doan

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