Topic: Credit

At a discussion session on October 28, many National Assembly (NA) deputies said it is necessary to adopt solutions to restore Vietnam’s corporate bond and securities markets as soon as possible, to ease the pressure on credit. In particular, the government needs to closely monitor interest rates at banks, so that sectors carrying out production and business can access credit at an appropriate cost.

Ms. Duong Thuy Dung, Senior Director of the Valuation, Research, and Consulting Department at CBRE Vietnam, said that more than 50 per cent of investors have problems with loans for real estate investment. If they continue to borrow, the cost will increase greatly. They want to sell but are unable to do so. If credit is not loosened by 2023, the real estate market will see a sell-off and prices will fall.

The State Bank of Vietnam (SBV) has officially adjusted the credit limit for four banks - Vietcombank, HDBank, MB, and VPBank - in a bid to support weak credit institutions under government policy. An additional VND83.5 trillion ($3.49 billion) will be injected into the economy following the move. The credit growth limit at 18 banks has now reached 13.6 per cent.

A negative deposit-credit gap and the State Bank of Vietnam’s withdrawal of money have tightened liquidity in the banking system. Interbank VND rates have skyrocketed. The overnight interest rate on October 4 was up to 7.74 per cent per annum, or 2.58 percentage points higher than in the middle of last week. Deposit interest rates are expected to continue to increase in the near future.

At a press conference announcing results in the banking industry in the third quarter of 2022, Ms. Ha Thu Giang, Deputy Director of the Credit Department for Economic Sectors at the State Bank of Vietnam (SBV), said that as of September 16, credit in the economy had increased 10.47 per cent compared to the end of 2021 and 17.19 per cent year-on-year.

Sharing his views on controlling credit growth in the context of inflationary pressure, Mr. John Andre, a researcher and senior lecturer at a number of universities in Vietnam, said that one of the purposes of credit control is to improve credit quality and ensure the operational safety of the banking system. Vietnam’s credit/GDP ratio is currently at a high level and tending to increase.

Deputy Prime Minister Le Van Thanh has signed Directive No. 13/CT-TTg dated August 29, 2022 on a number of solutions to promote the safe and sustainable development of the real estate market. While requesting that real estate credit not be unreasonably tightened, the government also directed management agencies to strengthen supervision over lending.

The VND270 trillion ($11.5 billion) in bonds approaching maturity combined with the impact of shrinking credit lines are creating a great deal of concern at banks. The State Bank of Vietnam has also said that bad real estate debts are showing signs of increasing rapidly, reaching more than VND36 trillion ($1.5 billion) as of June 30, up 5 per cent compared to the end of 2021.

The Governor of the State Bank of Vietnam (SBV) has issued an action plan for the banking industry to implement the “Restructuring the system of credit institutions associated with bad debt settlement in the 2021-2025 period” project. The project clearly states the action plan for the banking industry on matters such as handling bad debts, improving credit quality, and boosting the financial capacity and operational efficiency of the Vietnam Asset Management Company (VAMC).

Conference attendees discuss the real estate market and offer their opinion as banks tighten credit for real estate business.