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Vietnam expecting bad debt surge mid-2024 on change to debt-restructuring regs

Vietnam’s banks are expecting a surge of bad debts when a moratorium on outstanding debt comes to an end in June of next year, Vietnam News is reporting.

Key points:

  • Bad debt at the end of Q3 2023 was 196.75 trillion (US$81 billion) up 61 per cent compared to Q2; 
  • The bad debt ratio of the banking system hit 6.16 percent;
  • 70 percent of mortgages are secured with real estate;

More details: Circular 02/2023/TT-NHNN gave banks more freedom to postpone repayments on outstanding debts back in April of 2023 but with a key caveat that these postponed debt repayments had to be cleared by June 30, 2024. A proposal has been put forward to extend the deadline to June 2025 but the State Bank of Vietnam is yet to make a decision.

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