The financial reports of 28 banks, analysed by Saigon Securities Corporation, have revealed that bad debts among those 28 banks have increased by 14 percent since the end of 2023. At the end of March, those bad debts totaled VND 224.14 trillion or US$8.8 billion
Of note, back in December banks went on a lending frenzy as they tried to make up for lacklustre credit growth throughout 2023 by cramming it all in at the end of the year. This saw very aggressive marketing campaigns take place and this led credit to grow by 4.35 percent in December as opposed to the average of 0.83 percent over the other 11 months of the year.
With demand for business credit very low, it was apparent that the bulk of the loans issued in December were to consumers. More lending, particularly to consumers, by default should mean more bad debt. That said, it will be interesting to see how much of this debt stems from that aforementioned lending frenzy back in December and if there is an abnormal amount of bad debt working its way through the system.