Negative difference between revenue and expenditure, high bad debt
The State Bank Inspectorate and Supervisory Authority, Soc Trang Branch, has just announced the conclusion of the inspection of An Binh Commercial Joint Stock Bank (ABBank) Soc Trang Branch for the period January 1, 2023 - June 30, 2024.
As of June 30, ABBank Soc Trang had a bad debt ratio of 9.67%, equivalent to VND 7,549 billion out of a total outstanding debt of VND 59.44 billion. The difference between revenue and expenditure was negative VND 2,766 billion.
Weak assessment and supervision
The inspector randomly selected 80 loan applications with a total outstanding debt of nearly VND 59.44 billion and discovered many violations: Loan appraisal was not strict, not fully assessing the customer's ability to repay; violating Circular 39/2016/TT-NHNN.
The loan inspection and supervision unit was lax, accepting retail invoices that did not comply with Decree 123/2020/ND-CP. Post-loan supervision did not comply with Clause 3, Article 94 of the Law on Credit Institutions 2010. ABBank Soc Trang also lent beyond the capital use plan, continuing to violate Circular 39/2016/TT-NHNN.
Debt collection and risk handling are still slow.
The unit has recovered 3.8 billion VND of debt using risk handling provisions. However, more than 37 billion VND of remaining debt has not been recovered as of June 30, 2024, accounting for a low proportion compared to the amount processed.
Requires correction by 31.3.2025
The inspection agency requested ABBank Soc Trang to correct the negative revenue and expenditure difference, improve governance, and reduce the bad debt ratio to below 3% before March 31, 2025.
Banks must develop feasible solutions and report results when they expire. At the same time, they must strengthen the anti-money laundering department if there are personnel changes at the branch.
