Hanoi (VNS/VNA) - In the face of rising bad debt amid the ongoing COVID-19pandemic, commercial banks have been forced to write up their loan lossprovisions, according to industry sources. 

Vietinbank wasto increase its non-performing loan coverage ratio from 119 percent at the endof September to 169 percent for the rest of the year, with risk provisions from14 trillion VND (617 million USD) to 17 trillion VND, said Vietinbank'sChairman of the Board Tran Minh Binh. 

The move was aresult of rising non-performing loans due to the pandemic and designed toimprove the bank's buffer for the year to come. 

"We haveto stay vigilant and be prepared for 2022," he said. 

VietinBank'scredit risk provisions increased to 14 trillion VND by the end of September, a22 percent, or 2.5 trillion VND, increase from the same period last year. Thebank has set aside 5.5 trillion VND in provisions during the third quarter of2021 as bad debt ratio reached 1.67 percent, the highest recorded in the lastfour quarters.

Vietcombank'sprovision cost has been reported to climb to over 8 trillion VND during thefirst nine months of the year, a 33 percent increase from the same period lastyear. During the third quarter alone, the bank raised its provision by 2.5trillion VND, a 25 percent increase year-on-year. 

Vietcombankreported its bad debt has doubled since the beginning of the year from 5.2trillion VND to 10.8 trillion VND (from 0.62 percent to 1.16 percent) resultingin a lot of pressure to allocate even more funds to its provisions. 

Meanwhile,BIDV has set aside 7.5 trillion VND during the third quarter, a 35 percentincrease year-on-year, raising its provisions to over 23 trillion VND duringthe first nine months, a 44 percent increase year-on-year. 

The bank hadthe highest bad debt ratio among commercial banks at 1.61 percent, a slightdecrease from 1.76 percent at the beginning of the year. 

The majorityof commercial banks have all reported an increase in provision cost during thefirst three quarters of 2021: ACB 2.8 trillion VND, VPBank 13.6 trillion VND,LienVietPostBank 887 billion VND and TPBank 2.3 trillion VND. 

Currentregulations dictate banks must maintain provision rates at 0 percent forstandard debt (Group 1), 5 percent for special attention required debt (Group2), 20 percent for subprime loans (Group 3), 50 percent for doubtful debt(Group 4) and 100 percent for potentially irrecoverable debt (Group 5). 

In addition,banks must also maintain 0.75 percent of total outstanding loans (excludingGroup 5) in general provision.  

However, theState Bank of Vietnam's (SBV) recent directives aimed at providing businesseswith COVID-19 financial relief have forced banks to set aside a largeramount than usual in provisions. 

"At thismoment, I think that banks have built their own scenarios. Besides reducinginterest rates to support people, the banks have also actively improved theirfinancial capacity to ensure good operations in the future," said NguyenQuoc Hung, General Secretary of the Vietnam Banking Association.

By the end ofSeptember, commercial banks have extended deadlines for over 270,000 customerswith a total loan of over 330 trillion VND with interest cuts, per the SBV'srequest, of 12.2 trillion VND from July 15 to September 30./.