State-owned lender Agribank said it faces no finacial problems even though it has a bad debt of 6.67 percent of its total loans.
Chairman Nguyen Ngoc Bao said most of the bad debt came from real estate loans offered in 2008 and 2009. Among loans to the agricultural sector, bad debt only accounted for 2 percent.
The bank, however, has a risk reserve that is almost enough to cover its bad debt, Bao said. "If we have already set aside a sum of money to cover 90 percent of the bad debt, there is no problems with our liquidity and financial conditions," he said.
"By the end of the year, the bad debt level will be lowered, but when all the debts can be collected depends on the market," Bao said. He admitted it would be hard to get the money back as the real estate market has been sluggish do to an oversupply and tightened credit.
Agribank, Vietnam's largest lender by assets, had an outstanding loan of VND416 trillion at the end of August. The lender plans to increase its loans for the agricultural sector to 80 percent next year to 67.5 percent now.
Bad debt in Vietnam's banking sector rose to 3.04 percent at the end of July but the level is still within control, the central bank said early this month.