Vietnamese banks remained weak in 2011

The State Bank of Vietnam reports less than satisfactory metrics for Vietnam’s banking sector in 2011.

The country's banks last year reported slower profit growth and reduced rates of return on equity and return on assets. The central bank also said the sector’s bad debts have been on a continuous rise.

"The absolute value and bad debt ratio of banks have been rising continuously, especially in the last months of 2011 and early in 2012," the central bank said in a report.

Bad debts in Vietnam hit US$5.18 billion, or 4.14% of total loans as of April, up from 3.06%. The rise was due to economic difficulties faced by businesses, said the central bank.

The government’s tight fiscal and monetary policies in 2011 intended to control inflation have also negatively impacted the performance of banks and businesses. Many enterprises are facing bankruptcy as a result.

The central bank said half of all lenders recorded lower profit last year and 10% of them faced losses. Overall profit growth of banks slowed to 15% in 2011.

The return on equity of Vietnam's banking system was 11.9% last year compared with 14.6% in 2010. Return on assets fell to 1.09% from 1.29% in 2010.

In contrast, other banks in Southeast Asia have an ROE of 14% to 15%.

Some 50 banks operate in Vietnam. The number includes three state-owned banks, 39 partly private banks and five fully foreign-owned banks.