ABBank leaves branches with bad debt up to nearly 10%

The Banking Inspectorate and Supervisory Board of the State Bank of Vietnam , Soc Trang Branch, has just announced the inspection conclusion of An Binh Commercial Joint Stock Bank, Soc Trang Branch (ABBank Soc Trang).

In addition to complying with the regulations of the State Bank of Vietnam (SBV) on capital mobilization activities, guarantee activities; debt classification, provisioning, use of provisions to handle credit risks;... in the process of operation, ABBank Soc Trang still has shortcomings and limitations that need to be overcome.

The inspection and supervision of the State Bank of Vietnam, Soc Trang Branch, concluded that the difference between income and expenses as of June 30, 2024 of ABBank Soc Trang was negative VND 2,766 billion, bad debt was VND 7,549 billion, accounting for 9.67% of total outstanding loans.

The inspection and supervision also pointed out the limitations in credit granting activities and anti-money laundering work at ABBank Soc Trang. Thereby, ABBank Soc Trang is required to have specific solutions to overcome the negative difference in accumulated revenue and expenditure in order to improve financial health, improve the quality of management and operation at the unit; at the same time, have effective solutions to reduce the bad debt ratio to below 3%.

The roadmap and solutions must be clearly stated in the plan, with the deadline for completing the plan before March 31, 2025.

ABBank Soc Trang has not assessed loan needs closely, the inspection conclusion clearly stated. Illustration photo: Hoang Ha.

The Inspectorate and Supervisory Board of the State Bank of Soc Trang province requested ABBank Soc Trang to promptly improve the organizational structure of the anti-money laundering department when there are personnel changes according to regulations.

In case the debt has expired but has not been recovered, the branch must develop a feasible handling plan and report the results.

During this inspection, the inspection team randomly selected 80 loan application files of 63 customers with a total outstanding debt of nearly VND 59.44 billion, accounting for 76.15% of the total outstanding debt as of June 30, 2024.

The results showed that ABBank Soc Trang had not assessed loan needs closely, had not evaluated capital use and financial capacity to repay customers, violating the provisions of Circular 38/2016 of the State Bank.

ABBank Soc Trang's inspection and supervision of loan use were not strict, disbursement to customers to purchase goods and services in cases where invoices must be issued according to regulations, but the unit collecting documents proving the purpose of capital use was a list of loan use, a list of goods purchased by customers themselves, and retail invoices that did not comply with the regulations in Decree 123 of 2020.

ABBank Soc Trang has not yet strictly implemented post-loan inspection and supervision. The content of the post-loan inspection report has not analyzed and evaluated the use of loan money, implementation of loan plan, production and business activities, and the customer's ability to repay the loan, which is not in accordance with the provisions of Clause 3, Article 94 of the Law on Credit Institutions 2010.

Regarding the loan limit, ABBank Soc Trang exceeded the customer's capital usage plan, violating the provisions of Article 12 of Circular 39 of the State Bank.

Regarding debt recovery for which provisions have been used to handle credit risks, ABBank Soc Trang has recovered 3.8 billion VND of debt for which provisions have been used to handle risks; the outstanding debt balance for which risks have been resolved and which has not been recovered as of June 30, 2024 is more than 37 billion VND. This shows that the recovery is still slow and the amount recovered accounts for a low proportion compared to the amount of risks resolved.

Source: https://vietnamnet.vn/abbank-co-chi-nhanh-de-no-xau-len-den-gan-10-2358147.html