Expectations rise for lower bank bad debt towards year-end

At the end of September, Nam A Bank's total assets had exceeded $15.08 billion, up more than $5.28 billion from the beginning of the year.

Its bad debt (NPL) ratio stood at 2.73 per cent, down from 2.85 per cent as of June 30. Meanwhile, the bank's loan loss reserve (LLR) ratio had surged from 39 per cent at the end of June to nearly 46 per cent by the end of September. Its liquidity reserve ratio had reached nearly 20 per cent, double the minimum level required by the State Bank of Vietnam (SBV).

At KienlongBank, total assets had reached $3.91 billion after the first nine months of 2025, with mobilised capital of $3.5 billion and outstanding loans of $2.84 billion, up approximately $292 million and $376 million compared to the outset of the year.

The bank has maintained its NPL ratio below 2 per cent, with an LLR consistently above 80 per cent for three consecutive quarters.

As of the end of the third quarter (Q3), VPBank had a consolidated NPL ratio below 3 per cent. Over the nine months, recoveries from previously written-off debts totalled nearly $116 million, with Q3 recoveries up 29.7 per cent from Q2.

By late September, the bank's consolidated capital adequacy ratio (CAR) remained above 13 per cent, keeping it among the top performers in the system.

For LPBank, as of September 30, its total assets had risen 6.1 per cent on-year to $21.57 billion. However, its total bad debts had climbed 32.4 per cent to $278 million, pushing the NPL ratio from 1.58 per cent to 1.79 per cent, though still below regulatory limits.

PGBank reported a pre-tax profit of nearly $19.88 million for the first nine months of 2025, up 44 per cent on-year. Alongside record profits, the bank's NPL ratio stood at 2.84 per cent. Its outstanding bonds at the Vietnam Asset Management Company (VAMC, dubbed the bad debt bank) totalled $45.58 million at the end of Q3, prompting provisions of nearly $21.25 million against these bad debts.

According to its consolidated Q3 financial report, VietABank recorded a pre-tax profit of $13.44 million, up 46 per cent from the same period last year, bringing its nine-month cumulative profit to $42 million, an increase of 32 per cent on-year.

In terms of asset quality, VietABank's bad debts had reached $62.24 million by the end of Q3, up 42.6 per cent, raising its NPL ratio from 1.37 per cent to 1.79 per cent, though still below the threshold.

According to a survey by the SBV's Forecasting, Statistics, Monetary, and Financial Stabilisation Department, the overall customer risk level (MBRR) has continued to rise slightly in Q3 and Q4 of 2025.

However, the assessment of overall customer risk as 'high' or 'fairly high' has declined significantly compared to the previous survey.

By the end of 2025, credit institutions forecast that overall MBRR will remain largely unchanged from the end of 2024, and are optimistic about improvement in 2026.

The NPL ratio is expected to continue its modest downward trend in Q3, matching earlier forecasts, and to decline more sharply in Q4.

In an SBV survey released early this month, credit institutions also revised down their projections for the NPL-to-loan ratio by year-end 2025 compared with previous estimates.

The overall business performance and pre-tax profit picture across the banking system in Q3 were assessed as improved over Q2, although still falling short of expectations.

The gradual improvement is expected to persist through the final quarter of the year. Between 71.7 per cent and 78.3 per cent of credit institutions projected that internal factors will improve in Q3 and for the full year 2025, while 68.9 per cent to 72.6 per cent believed that external factors will have a positive impact, contributing to better overall business conditions in both periods.

A more robust legal system is crucial to unlocking over $160 billion in credit resources as Vietnam moves to amend the Law on Credit Institutions, preventing a surge in bad debt from turning into dead capital.

The financial market has witnessed a wave of mandatory bank acquisitions in the recent past. Early this year, major commercial lenders MB, HDBank, and VPBank took over struggling lenders OceanBank, DongA Bank, and GPBank, respectively.

Banks have reported strong first-half results, fueled by double-digit credit growth, improved asset quality, and operating efficiency, pointing to a positive outlook for the rest of the year.