Strongly adjusting credit flow

VCN - Ensuring the safety and soundness of the financial market, including the banking system, is a key issue when the risks are forecast to remain hidden and likely to increase under the impact of the financial crisis; many problems come from the external and internal economy of the bank.
Risks to the banking system still exist, so stricter control solutions are needed. Photo: ST
Risks to the banking system still exist, so stricter control solutions are needed. Photo: ST

Real estate credit, investment in corporate bonds still increase

According to a recent report by the State Bank of Vietnam (SBV), as of March 31, 2022, outstanding credit for real estate business reached nearly VND784,000 billion, up 12% compared to the end of 2021 and tripled the overall credit growth rate of the whole system.

Credit for home purchase and home repair also continued to increase sharply, bringing the total outstanding loans to real estate to over VND2 quadrillion, accounting for about 20% of total loans.

Around the end of March 2022, a number of banks announced they would suspend the disbursement of loans to the real estate sector, in order to ensure compliance with the SBV's regulations on credit growth. However, these are banks that have closed their limits and are only temporary, so many bank leaders later confirmed that there was still room and would continue to increase lending to the real estate sector.

At the recent General Meeting of Shareholders (AGM) of VPBank, Mr. Nguyen Duc Vinh, General Director of VPBank, said that it is necessary to tighten credit in the real estate sector when this market is growing strongly.

However, people's need to buy houses is a legitimate need and is not restricted. While for VPBank, real estate plays an important role in the loan structure, currently accounting for less than 10% of the total loan balance, so it will continue to be maintained and promoted in the future but will focus on serving the needs of customers, and continue to control the credit of resort and speculative real estate.

Similarly, according to Mr. Nguyen Manh Quan, General Director of ABBank, some banks had to temporarily suspend real estate lending due to excessive lending.

But at ABBank, the proportion of real estate loans is still low, accounting for 6% of total outstanding loans, and housing loans accounted for 17% of total outstanding loans. For banks, the real estate lending index is closely monitored by the SBV, but ABBank is rated well by the SBV, not in the warning group, so it will continue to boost lending because there is still room.

In fact, real estate loans of many banks accounted for 30-70% of total loans. Considering the financial statements of the first quarter of 2022 of some banks, Techcombank has taken the lead in terms of outstanding loans for real estate business with outstanding loans of VND98,166 billion, accounting for 26.84% of the total balance in debt. Second is VPBank with total outstanding loans of VND42,484 billion, accounting for 11.35% of total outstanding loans; followed by SHB with VND24,826 billion, accounting for 6.68% of total outstanding loans.

In the annual publication of Vietnam's economic assessment in 2021, experts emphasized that the growth rate of real estate credit reached 17.14%, higher than the average growth rate of the whole system. This development shows that real estate and banks are still dependent on each other for growth.

Not only real estate, but banks have also added a significant amount of corporate bonds. In 2021, the total amount of corporate bonds held in the banking system is VND274,000 billion, accounting for 2.63% of total credit outstanding. Of which, Techcombank, VPBank and TPBank alone increased their corporate bond balance by VND38,000 billion, equivalent to 14% of the total outstanding corporate bond of the whole industry. The banks' financial statements for the first quarter of 2022 show that by the end of the first quarter, Techcombank is holding VND76,582 billion of corporate bonds, up 22.3% compared to the end of 2021; VPBank was VND41,593 billion, up 50%; MB was VND46,319 billion, up 26%.

Meanwhile, the financial statements for the first quarter of 2022 of banks show that the bad debt ratio tends to increase for the most part. According to experts of SSI Research, the bad debt ratio deteriorated in the first quarter partly due to the reclassification of restructured debts after the end of the restructuring period. This leads to great pressure on provisioning at banks.

Be strong to reduce risks

Regulatory agencies have continuously issued warnings as well as issued mechanisms to manage capital markets, reducing potential risks in the banking system. From the beginning of 2022, Circular 16/2021/TT-NHNN (Circular 16) stipulating the sale and purchase of corporate bonds by credit institutions has taken effect, which has contributed to preventing debt reversal.

An expert commented that this Circular has forced banks to increase provisioning, and increase the quality of corporate bonds, thereby reducing risks. In addition, the regulations also prevent debt reversal and credit room evasion.

For real estate credit, according to Mr. Nguyen Quoc Hung, General Secretary of the Vietnam Bankers Association, controlling real estate credit is necessary, but banks only stop lending to the speculative segment, still allowing real estate credit, borrowing to people who want to buy real houses and good projects. Banks also said they have appraised projects more closely, selecting good projects with high liquidity and adequate collateral.

For example, Techcombank is the bank with the highest proportion of real estate loans in the system and has just moved to "tighten" credit in this segment, but speaking at the recent AGM, according to Mr. Ho Hung Anh, Chairman of the Board of Directors of Techcombank, the real estate sector still has conditions to promote development and in the past five years, the bank has not had a problem with real estate lending. Currently, the bank focuses on retail and real estate consumer loans. With corporate bonds, Techcombank also appraises it as a medium and long-term loan.

Pham Quang Dung, Chairman of the Board of Directors of Vietcombank, also said that the bank has always actively participated in the corporate bond market with diverse roles such as professional investors, consulting organizations, guarantee organizations, and payment service providers, etc. Therefore, all outstanding corporate bonds of Vietcombank are currently classified as Group 1 debt (qualified debt). The issuers are all doing business efficiently and paying on time.

However, according to experts, more or less credit flow has not yet entered the manufacturing sector but is still poured into the asset market. Therefore, the management agencies must take more drastic measures but also be flexible.

Regarding the general solution to control risks in the banking industry, economist Dr. Vo Tri Thanh said that in the short term, there should be a "flexibility" to regulate medium and long-term lending.

The handling of frozen and rescheduling debts according to the SBV's circular must also be "smart" because it depends on the recovery and implementation of the economic recovery and development program. In addition, according to Dr. Vo Tri Thanh, banks need to continue to increase capital to ensure capital adequacy ratio, ensure governance activities according to international practices, and control credit in risky areas.

On the side of management agencies, leaders of the State Bank have also repeatedly affirmed that they will regularly inspect, examine and supervise the investment in corporate bonds of credit institutions, thereby directing, warning and requesting requires credit institutions to control risks in corporate bonds investment activities.

In addition, the State Bank will also continue to tighten lending to risky sectors, including real estate. Recently, regarding credit pouring into real estate, the Ministry of Construction also proposed to closely monitor and control to avoid double risks; prevent the use of capital sources for production and consumption loans for investment and real estate business in the form of speculation.

By Bình Nam/Bui Diep

Related News

The bad debt ratio has increased, putting pressure on banks

The bad debt ratio has increased, putting pressure on banks

VCN - According to the summary of 2023 business results of 28 listed banks, the total volume of bad debt by the end of 2023 increased by more than 40% compared to 2022, to nearly 195,000 billion VND.
Behind the impressive net profit growth in the fourth quarter of 2023

Behind the impressive net profit growth in the fourth quarter of 2023

VCN - In the context of business results for the fourth quarter of 2023, besides the impressive increase in net profit, there are still many points that need to be considered more carefully such as revenue that has not increased correspondingly, gross profit margin sharply decreased, and abnormal profit increases sharply.
It is necessary to improve the financial capacity of four state-owned commercial banks

It is necessary to improve the financial capacity of four state-owned commercial banks

VCN - Facing with the current situation of the economy's capital needs and ensuring the safety of the banking industry, improving the financial capacity of state-owned commercial banks always needs to be done.
Commercial banks invest VND 15,000 billion in digital transformation

Commercial banks invest VND 15,000 billion in digital transformation

VCN - Before 2016, about five hundreds to one million payment transactions per day was a dream number for banks. Currently, the average transaction volume has reached eight million transactions per day, with a large number of transactions cash translation is about VND 900,000 billion.

Latest News

Efficiency from inspection and supervision - a key factor for a transparent stock market

Efficiency from inspection and supervision - a key factor for a transparent stock market

VCN - Since the 2019 Securities Law officially took effect, the average annual number of penalty decisions has more than doubled compared to the period 2015-2020. This shows that the strictness of the law is being enforced effectively.
SBV approves designation of 14 important banks in 2024

SBV approves designation of 14 important banks in 2024

The State Bank of Vietnam (SBV) has issued Decision No. 538/QD-NHNN approving the group of credit institutions and foreign bank branches which play an important role in the country's banking system in 2024.
Central bank urges card issuers to review procedures

Central bank urges card issuers to review procedures

The State Bank of Vietnam (SBV) has issued a directive, demanding commercial banks to review their procedures in issuing and managing bank cards.
Warning about impersonating tax authorities to commit fraud during  tax finalization month

Warning about impersonating tax authorities to commit fraud during tax finalization month

VCN - The Tax industry has continuously provided information and issued warnings about impersonating tax officials and tax authorities to commit fraud against taxpayers, but there are still people who fall into the trap of these fraudsters, especially during the peak month of tax settlement.

More News

“3 priorities, 3 breakthroughs” in task deployment of State Treasury

“3 priorities, 3 breakthroughs” in task deployment of State Treasury

VCN - To complete the task from now until the end of 2024 and successfully implement the State Treasury Development Strategy as planned, Deputy Minister of Finance Bui Van Khang stated "3 priorities, 3 breakthroughs" " and 7 notes in task performance.
Effectively apply M&A to go long distance

Effectively apply M&A to go long distance

VCN - With advantages such as being cheaper than domestic capital, and accompanied by many factors such as technology, skills, management, market... foreign capital is a popular trend among businesses. Domestic enterprises seek through M&A activities to ensure sustainable development for the future.
Hanoi State Treasury proactively digitizes and transforms operating methods

Hanoi State Treasury proactively digitizes and transforms operating methods

VCN - Hanoi State Treasury always proactively transforms and reforms its operating methods with the motto of “taking customers as the center” and taking the satisfaction of organizations and individuals as a measured level of task completion by civil servants.
The Ministry of Finance continues to strongly improve the business environment, reducing the rate of businesses temporarily suspending operations

The Ministry of Finance continues to strongly improve the business environment, reducing the rate of businesses temporarily suspending operations

VCN - The Ministry of Finance aims to continue to strongly improve the business environment, create a healthy competitive environment, rapidly increase the number of newly established businesses, and reduce the rate of businesses temporarily suspending operations; reduce input costs and legal compliance costs in investment and business activities, reduce policy risks, strengthen trust, create a fulcrum for recovery and improve business resilience.
Vietnam tackles obstacles to stock market upgrade

Vietnam tackles obstacles to stock market upgrade

Vietnam's ambition to elevate its stock market from "frontier" to "emerging" status by 2025 faces two key hurdles, including pre-trade margin requirements for foreign investors and foreign ownership ratios in certain sectors, said Deputy Director of the Securities Market Development Department under the State Securities Commission (SSC) Pham Thi Thuy Linh.
Looking forward clear instructions in tax finalization in 2023

Looking forward clear instructions in tax finalization in 2023

VCN - Mr. Hoang Quang Phong (photo), Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) discussed supporting taxpayers in tax finalization in 2023.
Proactive in dealing with exchange rate pressure

Proactive in dealing with exchange rate pressure

VCN - Recently, the State of Bank (SBV) withdrew VND 30,000 billion through the T-bills channel, contributing to reducing exchange rate pressure. This is just one of the moves of the monetary policy management agency to stabilize the foreign exchange market, contributing to supporting the macro economy as well as import-export business activities of enterprises.
Tax sector accompanies and supports tax finalization

Tax sector accompanies and supports tax finalization

VCN - In the first months of 2024, the Tax sector has deployed peak months to support tax finalization in many different forms, thereby solving many problems in settlement of corporate income tax and personal income tax for taxpayers.
Minister of Finance: Fairness and transparency for the insurance market

Minister of Finance: Fairness and transparency for the insurance market

VCN - According to Minister of Finance Ho Duc Phoc, the Ministry has strengthened inspections to correct violations in the insurance sector, demonstrating fairness and transparency in the market.
Read More

Your care

Latest Most read
Efficiency from inspection and supervision - a key factor for a transparent stock market

Efficiency from inspection and supervision - a key factor for a transparent stock market

VCN - Since the 2019 Securities Law officially took effect, the average annual number of penalty decisions has more than doubled compared to the period 2015-2020. This shows that the strictness of the law is being enforced effectively.
SBV approves designation of 14 important banks in 2024

SBV approves designation of 14 important banks in 2024

The State Bank of Vietnam (SBV) has issued Decision No. 538/QD-NHNN approving the group of credit institutions and foreign bank branches which play an important role in the country's banking system in 2024.
Central bank urges card issuers to review procedures

Central bank urges card issuers to review procedures

The State Bank of Vietnam (SBV) has issued a directive, demanding commercial banks to review their procedures in issuing and managing bank cards.
Warning about impersonating tax authorities to commit fraud during  tax finalization month

Warning about impersonating tax authorities to commit fraud during tax finalization month

VCN - The Tax industry has continuously provided information and issued warnings about impersonating tax officials and tax authorities to commit fraud against taxpayers, but there are still people who fall into the trap of these fraudsters, especially dur
“3 priorities, 3 breakthroughs” in task deployment of State Treasury

“3 priorities, 3 breakthroughs” in task deployment of State Treasury

To successfully implement the State Treasury Development Strategy as planned, Deputy Minister of Finance Bui Van Khang stated "3 priorities, 3 breakthroughs" " and 7 notes in task performance.
Mobile Version