Control on credit capital tightened

Bank credit increased robustly at 4.03 percent in the first quarter of 2022, 2.7 times higher than the same period last year. This is the highest growth rate in the past five years.
Control on credit capital tightened ảnh 1 Currently, many banks are providing home loans with reasonable interest rates. (Photo: SGGP)
Preparing capital for priority areas

The strong growth of credit in the first quarter shows that capital flows circulate more efficiently, the economy gradually recovers, and the health of enterprises is improving. In Ho Chi Minh City, credit growth in the first quarter of 2022 increased by 3.65 percent compared to the end of 2021 and 13.1 percent over the same period. Of which, credit growth in February was nearly double that of the whole country.

Deputy Director of the State Bank of Vietnam - HCMC Branch Nguyen Duc Lenh explained that credit recovered strongly because the city had controlled the pandemic, and all the production, business, and consumption activities had returned to normalcy.

Currently, 100 percent of businesses and business households in HCMC have resumed operations, which is a favorable condition for credit institutions to increase capital supply. Especially, some service industries, such as tourism, accommodation, restaurants, hotels, catering services, and transportation, have higher credit absorption than average credit growth. Thanks to increased capital demand, along with efforts to lower interest rates, the credit growth of banks was fairly good.

Over the past time, many commercial banks have also actively promoted many preferential loan programs to accompany enterprises in reconnecting supply chains that were broken due to the impact of the Covid-19 pandemic. Many banks have offered preferential loan packages to businesses in the tourism sector or cooperated to design programs to optimize costs and experiences for tours. For instance, Vietcombank has been providing capital to customers who invest in accommodation facilities with a maximum loan limit of 50 percent of the total investment for a 12-year loan term. HDBank and Sacombank have participated in connecting with the European Chamber of Commerce in Vietnam to develop products and services to serve businesses and international tourists.

Recently, eight banks, including Vietcombank, Agribank, BIDV, Vietinbank, MB, TPBank, VPBank, and MSB, have signed a contract to grant credit for the Hoa Phat Dung Quat 2 Iron and Steel Production Complex Project to Hoa Phat Dung Quat Steel Joint Stock Company, with a total investment of VND85 trillion.

In addition, in the face of the complicated fluctuations of the global petroleum market and the movement of domestic petroleum supply and demand, commercial banks are also required to actively balance their capital sources and consider creating conditions to increase the credit limit granted to key fuel enterprises to promptly import petroleum products following the import quota, contributing to ensuring the supply of petrol and oil for the domestic market.

Restricting real estate credit

When the economy recovers, it is forecasted that the demand for capital will continue to increase in the coming time. By the end of the first quarter of 2022, the credit growth of many commercial banks rose by more than 5 percent, nearly running out of the credit limit assigned by the State Bank of Vietnam at the beginning of the year. Therefore, although the real estate sector has a high demand for loans and is a profitable segment for banks, some commercial banks have locked real estate credit to ensure safety for the banking system.

According to a Sacombank leader, credit quality must be strictly controlled because real estate has increased rapidly in some areas. As for Techcombank, which has the highest real estate loan balance in the banking industry, the lender has also temporarily suspended the disbursement of real estate loans and will only consider it in the second quarter of 2022.

However, some banks said that they would not completely stop real estate lending. According to HDBank's leader, at present, the bank still lends to individuals to buy houses and even for housing development projects. However, projects considered for loans must meet all financial and legal conditions, requirements on collateral assets, and HDBank's loan criteria. Meanwhile, OCB still provides real estate loans because its real estate credit balance is still below the threshold allowed by the SBV.

According to Dr. Can Van Luc, BIDV's Chief Economist, currently, the total outstanding loans for real estate are about VND2 quadrillion, accounting for 20 percent of the total credit balance of the whole economy. In which, 65 percent of real estate credit balance is home purchase and home repair. During two years of the Covid-19 pandemic, due to low interest rates, credit for home purchase and home repair loans increased by 15-16 percent compared to before, and that for real estate trading edged up by 7-8 percent. Of course, there will be ambiguity between loans for home purchase and home repair and real estate speculation, but the proportion is negligible.

However, many people think that with a steep increase in land prices over the past time, it is inevitable for a large amount of credit to flow into this segment. However, in 2021, one of the units that bought a lot of corporate bonds, especially real estate corporate bonds, were commercial banks. Therefore, experts warn that if the situation that banks join hands with real estate enterprises to buy corporate bonds to reverse debts is not tightened, the risks will be unpredictable.

Ms. Ha Thu Giang, Deputy Director of Credit Department for Economic Sectors - SBV: Facilitating real estate loans to serve actual needs

In 2022, the SBV will continue to direct credit capital flows to priority areas, creating favorable conditions for businesses and people to access bank credit, restricting black credit; at the same time, strictly control real estate credit to large customers and large projects, especially speculative real estate projects with high risk coefficient. However, the bank still creates favorable conditions for residential real estate and consumer credit to serve actual and legitimate needs.

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