Before the 7th session of the National Assembly on May 20, Ho Duc Phoc, State Auditor general, sent to National Assembly deputies the audit report on the results of 2018.
Accordingly, the results of audited financial statements, activities related to the management and use of state capital and assets in 2017 of the State Bank of Vietnam (SBV) and seven financial, banking and insurance organisations, show that the management of the monetary policy and banking activities of SBV in 2018 has contributed to completing the socio-economic development plan and monetary policy objectives.
Specifically, inflation was controlled at the average level of 3.53%; economic growth reached 6.81%; credit growth was at 18.17 percent (target of 18%); the foreign exchange reserve reached the highest level, contributing to stabilising exchange rates and interest rates.
Audited financial and banking institutions achieved safety ratios in operation, high profit or positive difference of revenue and expenditure, profit to capital ratio of over seven percent.
But the audit report also pointed out a number of shortcomings; in particular, some credit institutions grew credit beyond the allowed level allowed by SBV. These are Bao Viet Joint Stock Commercial Bank (BaoViet Bank), Southeast Asia Joint Stock Commercial Bank (Seabank), Nam A Joint Stock Commercial Bank (Nam A Bank), Vietnam Public Joint Stock Commercial Bank (PVcomBank) and Vietnam Thuong Tin Joint Stock Commercial Bank (Vietbank) (with total outstanding loans exceeding 6.988 trillion dong).
Violating regulations on capital contribution and shares purchase limit, Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank) and Kien Long Joint Stock Commercial Bank (Kien Long Bank) own shares directly back and forth.
Five credit institutions including Maritime Joint Stock Commercial Bank (MSB), Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Construction Commercial One Member Limited Liability Bank (Construction Bank), Ocean Commercial One Member Limited Liability Bank (Ocean Bank) and Vietnam Bank for Agriculture and Rural Development (Agribank) hold shares of more than two other credit institutions.
Auditor also found that Vietnam Assets Management Company (VAMC) had not played a role in buying debts and dealing with bad debts. Specifically, there was no price appraisal (the purchase price was equal to the outstanding balance minus (-) the risk reserve determined by the credit institution); did not check, evaluate the borrowers, the honesty, accuracy of records, documents and collateral of debts. VAMC handled bad debts after purchasing mainly through the re-authorisation for credit institutions.
The audited results also showed that SBV had not yet developed a roadmap to reduce cash proportion to less than ten percent of the total payment facilities under the cashless payment development project in Vietnam in the period 2016-2020 (In the period from 2011 to 2017, the ratio of cash to total means of payment was nearly 12%.) Capital adequacy ratio (CAR) of the whole system, according to the report, was not reliable.
Excluding weak banks and zero dong banks, some commercial banks invested in cross bonds, making the virtual improvement of CAR. Moreover, many commercial banks improperly classified debts, affecting profits and reducing CAR.
SBV was still slow to finalise the interest rate support programmes, had not collected 108.22 billion dong of outstanding debts of of group two and $2.2 million of potential outstanding debts of group two to repay the State budget, as of December 31, 2017, including: Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) (40.03 billion dong), Agribank (30.95 billion dong) and Vietinbank (36.23 billion dong and $2.2 million).
There have been some banks that have not finished resolving outstanding debts for many years. For example, at the Vietnam Bank for Social Policies (VBSP), the embezzlement and appropriation from savings and loan groups at 28 branches before 2010 and handover amount from Agribank and State Treasury of 3.4 billion dong.
Some banks had ineffective financial investments, such as Agribank that invested 2.391 trillion dong in six subsidiaries and the dividends and profit received in 2017 was 12 billion dong.
Inadequate and inaccurate revenue and income accounting was also an issue pointed out in the auditing report and Agribank was named with an interest rate surplus of 136 billion dong.
After that, Agribank also inappropriately classified debts, the State Auditor adjusted to reduce the debt balance of Group one to 1.254.5 trillion dong, increasing the debt balance of group two to 703.6 billion dong, increasing outstanding loans of group three to 55.4 billion dong, reducing debt balance of group four to 100.4 billion dong, increasing debt balance of group five to 595.9 billion dong. Agribank made inaccurate provision for credit risks, which have been adjusted by State Auditor, in which the specific provision expenses increased to 341.5 billion dong and the general provision expenses declined to 4.9 billion dong.
In association with the Agribank, there are also errors in the order, procedures for lending and interest rate support in contravention of regulations.
With the VBSP, the auditor said that the write-off of 95.37 billion dong for 9,187 customers was considered missing according to the confirmation of the People’s Committee and the police of communes and wards, not in accordance with the 2015 Civil Code, in which some customers still have health insurance cards, pay social insurance or visit relatives.
In addition, the bank did not negotiate the fee for raising capital with credit institutions, but paid at the maximum rate of 1.35 percent as stipulated by SBV, affecting the compensation for interest differences from the state budget.
