Bad debts in Vietnam's banking system rose to 4.14 percent of total loans as of April as economic difficulties prevented businesses from settling debts and getting new loans, a local newspaper said on Tuesday.
The total non-performing loans at banks stood at VND108.6 trillion ($5.18 billion) at the end of April, the Vietnam Economic Times said on its website, quoting the central bank governor's report to the National Assembly.
Bad loans at banks were about 3.06 percent of total loans at the end of last year, the report showed. In the first four months this year, bad debts jumped at an average of 8.6 percent a month, according to the report.
"The property market was slow to recover, which added difficulties to businesses' ability to settle loans and to banks' settlement of mortgages to resolve non-performing loans," the newspaper quoted the report as saying.
Property accounts for around 60 percent of the mortgages in Vietnam's banking system, bankers said.
After years of heating credit expansion, Vietnam faced double-digit inflation and bad debts which analysts estimate at two to three times higher than the official data.
Money supply grew at an average of 30.2 percent a year while annual credit growth averaged at 33.2 percent in the 2006-2010 period, the National Financial Supervisory Commission, which advises the government, has said in a report.
In the banking system reform plan publicized in March, the State Bank of Vietnam said it would resolve non-performing loans by selling mortgaged bad debts to the Finance Ministry's Debt and Asset Trading Co and allowing banks to turn their loans into the stakes in borrowers' firms.
The government will consider buying property projects which were used as the mortgages for loans and use them for social welfare purposes and state agencies' use, the plan said.
The central bank also aims to establish a national asset management firm to speed up resolving bad debts, the newspaper said.