Local banks in Vietnam have kept slashing loans for realty projects over the past months this year, and shifted to lend effective business and investment activities to reduce risks as the real estate market is frozen, Vietnamese state media said.
Ho Chi Minh City-based banks said they had reduced VND3.7 trillion loans to real estate projects in the four recent consecutive months this year, the Labor newspaper said.
Meanwhile, Hanoi-based banks strongly cut loans for the field, and some of them halved their outstanding loans for real estate investors, the paper said.
“It is normal when local banks have cut loans for real estate projects, and currently banks are avoiding risks,” Pham Sy Liem, vice chairman of the Vietnam Construction Association was cited by the Capital Security newspaper as saying.
For the time being, local real estate developers are trying to survive while foreign investors see golden chances in Vietnam’s real estate market and want to tap this second-to-none chance.
In the first half this year, foreign investors pledged US$19.6 billion for real estate projects, out of US$31.6 billion in total.
The move by banks is in line with the State Bank of Vietnam’s requirements to curb credit growth rate to below 30 per cent in order to help curb soaring inflation, analysts said.
Several local banks had lent a great amount of medium and long-term cash to real estate developers in the second and third quarters last year and now it is too risky for them if they continue loaning, they pointed out.
The Deutsche Bank said it its recent report that the Vietnamese central bank will likely extend the year’s target to curb credit growth rate to 40 per cent instead of 30 per cent because many local banks have used up two thirds of their 30 per cent target’s credit growth rate.
Prime Minister Nguyen Tan Dung who has just had meetings with state-owned enterprises emphasized that the government will further tighten management and control over financial investment by state-owned companies, urging them to focus on core business activities.
Mr Nguyen also asked for halting licensing establishments of new banks because recently evidence has been seen at weak financial capacity of banks. (Labor Online, Capital Security)
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