Despite Recommendations, Banks Capital Still Flows Into Real Estate

On December 5th, Nguyen Hoang Minh, deputy director of the State Bank of Vietnam (SBV) HCM City branch, said that in the first 11 months of 2019, the total outstanding loans of banks in the city reached 2,200 trillion dong, up by 12.4 percent compared to the beginning of the year, while capital mobilisation growth was 11.9 percent compared to the beginning of the year. In particular, the outstanding real estate loans were 252 trillion dong, accounting for 11 percent of the total outstanding loans in the city, equivalent to a growth rate of 9.6 percent over the beginning of the year.

The SBV’s statistics on each credit segment as of August 2019 showed that lending to real estate segment (for both business and self-use purposes) grew by up to 14.58 percent compared to the end of 2018 and accounted for 19.14 percent of the total lending to the economy.

Considering the outstanding loans of the economy by September 2019 of about 7,880 trillion dong, real estate segment has a proportion of 19.14%, which means that about 1,500 trillion dong were provided to the market by credit institutions.

From the beginning of the year until now, and in the recent report to the National Assembly, the SBV has repeatedly affirmed its policy of strictly controlling credit in potentially risky areas such as real estate. Despite all the recommendations, real estate credit still increased significantly compared to the end of last year.

Recently, the SBV has issued Circular 22 in the direction of continuing to tighten real estate lending by gradually reducing the maximum ratio of short-term capital used for medium and long-term loans, and simultaneously increasing the risk coefficient for real estate business loans from 150 percent to 200%.

Economic expert Dr Can Van Luc said that the SBV has categorised the real estate market by risk ratio for credit institutions to offer loans, with encouragement given to those borrowing bank loans for real housing needs.


Category: Finance, Vietnam

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