Circular No.02 provides instructions for credit institutions and foreign banks on debt rescheduling and retention of debt categories to assist borrowers. It was issued in April 2023 with an initial expiry set for the end of June this year, but following this announcement from the SBV, the policy is now extended until the end of the year.

Despite the extension of the debt rescheduling period, banks reportedly remain worried about bad debts. To combat these concerns, ABBank reduced operating costs by 6 per cent to only $21.2 million in Q1 this year with its risk provisioning sum standing at $7.38 million for the same period, showing a 52 per cent jump on-year. The lender’s pre-tax profit fell around 70 per cent on-year, sliding to just $8 million.

VietBank's operating costs grew by 7 per cent to nearly $14.6 million in Q1, yet owing to efforts to consolidate its capital buffer to enhance asset quality, the bank deducted $3.75 million for risk provision, more than quadrupling the figure for the same period last year. As a result, VietBank's Q1 pre-tax profit fell by 63 per cent on-year to a little over $3 million.

Similarly, Eximbank increased risk provisioning to $11.7 million, a three-fold increase on-year, with pre-tax profit down 24 per cent to $27.5 million.

State lender VietinBank spent over $335.4 million on loan loss provisioning in Q1, an increase of 20 per cent on-year, so its pre-tax profit just saw a slight increase to almost $259 million compared to one year ago.

ACB set aside $21.3 million as a provisioning sum in Q1, twice as much as the same period last year, resulting in a 5 per cent drop in its pre-tax profit as it fell to just a little under $204 million.

Meanwhile, despite raising risk provisioning, some banks still recorded fairly high increases in their pre-tax profits.

Techcombank spent nearly $50.4 million on risk provisions in Q1, more than doubling last year's Q1 figure, while still reporting nearly $325 million in pre-tax profit, up 39 per cent on-year.

Southern lender HDBank increased its credit risk provision cost by 33 per cent to nearly $53 million, yet its pre-tax profit during the period was almost $168 million, showing a 47 per cent jump over the same period last year.

Hanoi-based major SSI Securities delivered a forecast that the banking system’s bad debt ratio may increase slightly by the end of the year, from 1.63 per cent to 1.68 per cent, as banks accelerate phasing out bad debts and the economy rebounds further.

The company, however, stressed the need to keep close eyes on ‘problematic’ bad debts, such as dubious debts, and overdue corporate bond packages, among others.