Sharing at the seminar themed Vietnam’s 2019 Stock Market: the macro perspective and businesses’ profit prospect recently held by VietinBank Securities, experts have given notable analyses on credit activities, partly showing the major risks which the banking sector is facing.
Firstly, the outstanding loans have decelerated continuously in recent years, both in terms of the outstanding personal loans and corporate loans.
Nguyen Quang Thuan, general director of Fiin Group said that the credit growth has slowed down in the last three years, in which the growth of outstanding personal loans has also declined after a period of string rise along with consumer credit (including both home lending and automobile lending).
Fiin’s data showed that while in 2015, the growth of total outstanding credit reached up to 27.8 percent, it fell to 22.5 percent in 2016, 20.1 percent in 2017 and 14.4 percent in 2018.
Particularly, the growth of outstanding personal loans fell by respectively from 43.3 percent in 2015 to 29.2 percent in 2016, 27 percent in 2017 and 22.5 percent in 2018.
Regarding outstanding corporate loans, the growth was respectively 21.2 percent in 2015, 19.1 percent in 2016, 16.3 percent in 2017 and 9.6 percent in 2018. According to Thuan, if accounting accurately, the growth of outstanding corporate loans would have been much lower than 9.6 percent.
Fiin Group forecasted that the outstanding loans will continue to decline in 2019.
The second notable analysis is real estate loans.
According to statistics of Fiin, the outstanding credit for real estate business currently accounts for 11.05 percent of the total outstanding credit, while the outstanding consumer loans for home repair and home purchase account for 12.04 percent of the total outstanding loans.
Thus, the total real estate outstanding loans currently account for over 23 percent of the total outstanding credit, equivalent to about 66 billion US dollars. In particular, the outstanding loans for home buyers increased by 35 percent while the outstanding loans for real estate developers doubled in 2018. The hot growth in this credit segment has made the State Bank of Vietnam (SBV) concerned, especially the loans to home buyers.
“For some projects, banks found out that loans have been given to both developers and home buyers. One asset was secured for two loans”, Fiin Group’s general director cited a case which poses risk.
SBV’s concern is an important reason why the SBV proposes to apply a 150 percent risk factor for personal loans serving living needs with a principal balance of three billion dong or more.
According to Fiin Group’s representative, this Circular is expected to have a big impact on the retail banking section, particularly consumer credit for home loans, because banks having large outstanding home credit will have to balance the capital adequacy ratio through tightening lending solutions.
In another notable analysis, Dr Nguyen Duc Thanh, director of the Institute for Economic and Policy Research (VEPR) shared about the possibility of tightening credit in the context when the economy is under pressure from inflation.
Specifically, Dr Thanh said that the regulation of monetary policy this year will not be as smooth as last year.
Explaining the power price hike of the government in the recent time, VEPR’s representative said that last year, the power prices did not rise but they were raised in the end of the first quarter because if waiting for more time, there would be no chance to increase power price when the inflation goes up.
According to Dr Thanh, the increase of power prices and petrol prices will “spread” to consumer prices. When there is a price rise, people start to worry and inflation expectation will arise. At that time, the SBV will have to tighten monetary policy and deal with inflation, otherwise it will continue to rise.
Dr Thanh said that, under the practices, the SBV will first tighten credit. However, he said that the management authority will probably not suddenly tighten credit because it may cause shocks.
