Mr. Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam-Ho Chi Minh City Branch (SBV-HCMC Branch), reported that the city’s banking industry’s capital mobilization nearly reached VND2.5 quadrillion last year.
Outstanding loans for the real estate sector grew by 8.8% last year, below the banking sector’s credit growth of 13.7%, said Nguyen Quoc Hung, director of the Credit Department of the State Bank of Vietnam.
The commercial banks’ preferential interest rates will be remain unchanged at 5 per cent for social housing this year, according to a decision of the State Bank of Viet Nam (SBV).
The State Bank of Vietnam (SBV) has warned commercial banks of the risks associated with accepting land-use rights certificates as collateral for loans.
The real estate sector remains highly risky, so the Government has required the State Bank of Vietnam to report quarterly in case of property developers with outstanding loans of over VND5 trillion (US$215.22 million).
The central bank warned commercial banks of this issue two years ago.
The 14.58% growth rate is higher than the average credit growth of the economy.
The State Bank of Vietnam (SBV) has instructed local commercial banks to be vigilant about their corporate bond investments, especially bonds of real estate firms, in order to minimize their risks.
Banks have poured money in real estate projects in Vietnam, according to experts.
Although the State Bank of Vietnam (SBV) has tightened credits to risky sectors including real estate, other banks have plentiful liquidity and are ready to lend the housing sector.
As the State Bank of Vietnam has tightened the control over real estate loans to ensure sustainable development of the market and safety of the banking sector, property transactions have fallen down in both Hanoi and Ho Chi Minh City in the first six months of the year, experts said at a recent meeting in Hanoi.
As the State Bank of Vietnam (SBV) has ordered tight control over real estate loans by credit institutions, property firms and developers have to seek alternative ways to raise their capital, and many of them have decided to issue bonds to fund their business.
Recently, the State Bank of Vietnam (SBV) has released a draft circular on safety limits for banks and called for public comment on the proposed changes. This circular would tighten regulations on lending, especially in the high-end property segment.
Banks have been told to pay more attention to property lending, following the policy of the State Bank of Vietnam (SBV) to revise upward the credit risk coefficient applied to loans for buying houses worth over VND3 billion.
Realty credit has soared compared with that of last year. Realty inventories have piled up, signaling rising risks. While inventories are hardly surprising, it remains to be seen how firms will deal with huge debt and rising inventories.