...Vietnam Banks: Loan Classification Rules a Positive, but Asset Quality Risks Remain Fitch Ratings believes the reported system NPL ratio of 3.7% at end-June 2015 (Figure 1) continues to understate problem loans in the Vietnam banking system, partly because it did not take onboard the lenders' bad-debt sales to Vietnam Asset Management Company (VAMC). The weighted average bad-debt ratio of Vietnam's seven largest commercial banks was closer to 7% (Figure 2) as of end-June 2015, after adding VAMC sales to NPLs and special mention loans. This is much higher than the 2.1% weighted average reported NPL ratio. This is notwithstanding the gradual enforcement of asset classification based on Credit Information Center (CIC) data, which Fitch believes would help align loan classification standards across banks. Starting April 2015, banks are required to classify loan quality according to the lowest rating assigned to each borrower by creditors as collated by the CIC. Fitch expects more sales to VAMC...
