Vietnamese Tiếng Việt | Saturday, November 17, 2018 | Advertise with Us
   
Text Size

Bank loan interest rates high, though capital still flows to real estate

Share
(0 votes, average 0 out of 5)

A large part of capital is still going to non-priority sectors, including real estate.

vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news, credit growth rate, SBV, real estate

Director of the Credit Department Nguyen Quoc Hung confirmed last week that credit has grown by 5 percent and that loans disbursed for the agriculture sector have increased rapidly.

The outstanding loans to agriculture have reached VND1,300 trillion, an increase of 5.8 percent, or 21 percent of total outstanding loans, while loans to industrial production rose by 3.75 percent only. 

Hung said the common characteristic of credit in the last few years is the gradual steady increase in all months. The targeted 17 percent credit growth rate in 2018 is within reach.

The State Bank affirmed that credit has supported economic growth as it concentrates on priority fields. Can Van Luc, chief economist of BIDV, said though the credit growth rate is not too high, the capital has been used more effectively.

He said that the central bank should focus on improving credit quality, and not just try to obtain a credit growth rate target. The government needs to take measures to develop the capital market to gradually ease reliance on bank loans.

Currently, the ratio of credit to GDP in Vietnam of 130% is relatively high compared with the world and the region. That is why IMF has recommended that Vietnam be more cautious when increasing credit. 

The credit growth for many years in the context of the modest increase in banks’ stockholder equity has led to a reduction in CAR (capital adequacy ratio).

In general, capital has been driven to priority business fields of the national economy. 

Meanwhile, banks have been warned of the risks when disbursing money for  business fields with latent risks.

In 2017, the growth rate of real estate credit was reported at 8 percent, less than half of the general credit growth rate. However, analysts said the capital flowing to the sector was huge.

Huynh Buu Son, a banking expert, said that real estate credit growth has slowed down, but loans continue to head for the real estate sector, funding both house buyers and real estate project developers.

An analyst said banks provide loans to the real estate sector because it is a profitable business. Moreover, if the real estate market warms up, banks will find it easier to collect debts, because most collateral are immovable properties.

However, some segments of the real estate market are believed to be risky. Therefore, banks have been advised to be cautious about real estate credit.

 

Source: VietNamNet

Maybe You Also Interesting :

» Bad debts return to banks

A report of the State Bank showed that the bad debt of the entire banking system had dropped from 10.08 percent in 2016 to 6.7 percent by the end of June 2018.

» VN banks believe 2018 profit target within reach

The credit growth rate this year is lower than 2017, but banks’ profit is predicted to be 20-25 percent higher.

» SBV urges customer info security

The State Bank of Việt Nam has issued a decree asking businesses to enhance customer information privacy after an alleged breach of mobile retail chain Thế...

Login