Banks tighten lending to real estate businesses

The banking sector sharply reduced outstanding loans to real estate activities in the first half of 2021 and will maintain these limits in the second half.

Many banks reduced outstanding loans for real estate activities in the first 6 months. (Photo cafef.vn)

According to the audited semi-annual financial statements, many banks reduced outstanding loans for real estate activities in the first six months.

LienVietPostBank’s financial statements show that outstanding home loans fell 52 percent to VND 1.67 trillion ($ 72.6 million), leaving the proportion of home loans to the bank at just 0.87 percent.

At VPBank, outstanding loans for real estate activities decreased by 12% to VND 32.4 trillion. Meanwhile, cash flow from personal loans to buy houses and receive land use rights was still high, with outstanding loans increasing 26% to over 45.8 trillion dong.

ABBank’s outstanding loans for real estate activities declined 13% to VND 2.69 trillion, while cash flow was strong and increased in other areas.

At MBBank, the loan balance for real estate activities decreased slightly from VND 75 billion to VND 9.32 billion, while the bank promoted credit flows in other areas such as household employment; wholesale and retail loans; automobiles and motorcycles; as well as manufacturing and processing.

MB’s total credit balance increased 10.9% in the first half of the year to over VND 314.9 trillion. Currently, loans to real estate companies represent only a very small proportion in MB of 3.31 percent.

On the contrary, there has been some growth in loans for the real estate sector. Loans outstanding for real estate and consultancy activities increased by 3.7% to 4.91 trillion VND at ACB, by 11% to over 101 trillion VND at Techcombank and by 10.7% at 8, 98 trillion VND at TPBank.

After a survey of credit trends of lending institutions by the Forecasting and Statistics Department, the State Bank of Vietnam (SBV) and credit institutions said they would slightly relax their overall credit standards to most customer groups in the last six months of 2021.

However, banks are still expected to tighten lending for securities, real estate, finance, banking and insurance, and tourism.

During the pandemic, although there was a reduction in interest rates on loans to support businesses and people, and some banks pointed out that support was not applied for real estate activities but by businesses providing accommodation services, restaurants and manufacturing businesses that were essential to the economy.

Vietcombank recently said that it will continue to reduce interest rates up to 0.5% per annum for all outstanding loans from customers in HCM City and Bình Dương Province and reduce interest rates. ‘interest at 0.3% per annum on the entire balance of loans from customers in other southern provinces and cities that apply social distancing in accordance with Directive 16.

However, the bank noted, the above interest rate reduction does not apply to securities lending, corporate mortgage lending, and securities mortgage lending.

Meanwhile, many real estate companies said they were facing a lot of hardship during the pandemic and suggested that banks should lower the support interest rate for them as well.

Nguyen Thi Thanh Huong, general manager of Dai Phuc Land Company, told local media: Other sources without any support.

Huong urged banks to consider cutting interest rates and freezing the debts of real estate investors in order to have more resources to develop projects to launch in the fourth quarter of the year.

Previously, the HCM City Real Estate Association (HoREA) sent a written request to the SBV and commercial banks, asking them to support businesses, including reducing loan interest rates by around 2% per annum for businesses. real estate companies, investors and clients of real estate loans.

At the same time, HoREA suggested that commercial banks consider and create conditions for businesses, including real estate companies, to access new loans for the implementation of projects.

Responding to real estate companies, many experts said that the interest rate on home loans has been very low for many years, and if it continues to fall, the risk to the market is very high.

The recent land boom has made banks fearful of pumping money into the industry while the SBV continues to say it will continue to strictly control credit flows to risky areas, including the immovable.

In order to help those who want to buy a house to live, many banks still have policies to lower the interest rates for their application. However, they will carefully assess the loans to avoid a slack for speculators, according to experts./.

Source: VNS

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