Talking to reporters of the local Newswire Bao Dau Tu late last week, Nguyen Quoc Hung, director of Credit Department (under the State Bank of Vietnam-SBV) said according to the most updated data of the State Bank, credit has increased more than five percent. Noticeably, agricultural credit has increased at very high rate.
“Agricultural credit currently has total outstanding loans of more than 1,340 trillion dong, up 5.8 percent while industrial credit has only swelled 3.75 percent. Currently, agricultural credit accounts for 21 percent of the total outstanding loans of the economy. In the coming time, if the government’s Decree No.55/2015/ND-CP dated June 9, 2015 is amended and supplemented, agricultural credit will definitely increase sharply”, said Hung.
Compared to last year, this year’s credit growth is slower but not significant. The common point of credit growth in several recent years is that it has increased steadily over the months, so the 17 percent growth target for this year is feasible.
The State Bank affirms that credit growth is good and even, the credit structure focuses mainly in priority sector, thereby supporting well the economic growth. Stable interest rates have satisfied well the capital demand for production and business.
Dr Can Van Luc, Chief Economic Expert of BIDV said although the growth was not so strong, the dong was used more effectively, supporting well the economic growth.
Dr Luc said the State Bank needs to continue focusing on credit growth quality but should not manage to attain this targeted number. Besides, the government also has to strengthen measures to develop capital market, gradually reducing the dependence on bank capital.
Currently, the credit/GDP ratio in our country is 130 percent, quite high compared to the region and the world. This is also the reason why the International Monetary Fund (IMF) suggests that Vietnam needs to be more prudent in credit growth, especially when the capital increase of banks remains limited. The consecutively increasing credit over the last many years, while equity increase is slow, has led many banks to lowered capital safety ratio and difficult to meet requirements of the Basel II.
*Interest rates remain high, capital still quietly flows into real estate
Basically, credit has now been “directed” to priority sectors. For potentially risky areas, the State Bank has consecutively warned credit organisations to pay attention to ensure credit quality.
In 2017, real estate credit growth rate was only about eight percent, less than half of the country’s credit growth speed. However, according to experts, the actual capital flow in this sector is still large.
According to economic expert Huynh Buu Son, in terms of growth rate, real estate credit has decreased from the previous period. In fact, banks still target at real estate loans, including home loans and investor loans.
As explained by experts, the fact that banks still want to offer real estate loans is understandable because this is profitable credit segment. Moreover, the increased real estate market will make it more favourable for banks to settle bad debts. However, experts also recommend that some segments of the real estate market is showing signs of bubble or supply exceeding demand, increased risks. Therefore, banks need to be cautious when pouring capital in this market. Especially, the capital injection via this consumer credit channel is very difficult to control.
Statistics of the State Bank said real estate credit is less than 500 trillion dong. However, according to Dr Le Xuan Nghia, real estate credit may “hide” in many other names such as construction credit, consumer credit, other services, etc.
According to information of Bao Dau Tu, not only real estate credit but credit for BOT projects also showed signs of strong rebound in the first months of this year. This explains why medium and long-term credit has rebounded since the beginning of this year. Meanwhile, interest rates for long terms have also tended to swell.
At the beginning of this year, the government asked the State Bank to continue to consider reducing lending rates. Dr Le Xuan Nghia said though Vietnam’s lending rates are relatively high compared to the region, the interest rate reduction depends on many factors such as bad debt settlement, inflation control, and credit growth control, anti-waste.
Especially, if a large amount of credit still flows into securities, real estate, BOT, etc. it will be more difficult for interest rates to decrease. Therefore, the State Bank needs to continue controlling tightly this capital flow, ensuring sustainable economic development.
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