On February 8, in Hanoi, the State Bank of Vietnam (SBV) organized a Conference on Credit for the Real Estate Sector under the chairmanship of SBV Governor Nguyen Thi Hong, with participants from many real estate companies, commercial banks, business associations and Vietnam Banks’ Association, together with representatives of several relevant Ministries and agencies, as well as the National Assembly’s Committee for Economic Affairs.
Speaking at the Conference, SBV First Deputy Governor Dao Minh Tu confirmed that the real estate is one of the markets that have a direct connection with the money and the credit markets. Over the recent months, the real estate market has experienced a number of irregularities, such as the imbalance between supply and demand, with excess supply in the high-end segment, and a shortage of affordable apartments and social housing units; the cases that occurred related to the capital mobilization activities in the stock and corporate bond market, leading to the lack of confidence among investors, causing it more difficult for companies to mobilize capital.
In that context, the Prime Minister has recently established a task force (with the SBV as a member) to review and resolve the difficulties and obstacles in the implementation of real estate projects.
According to the latest statistics, the credit outstanding for the real estate sector by the end of 2022 reached about VND 2,580 trillion, up by about 24.27% as compared to that of the end of 2021, accounting for a large proportion of the total loan outstanding of the whole economy (21.2%), which was the highest level over the last five years. Thus, it can be seen that the credit institutions have still been providing credit to the real estate sector with a high growth rate and a large loan outstanding. For feasible projects and business plans, the credit institutions have provided credit in accordance with the laws.
SBV First Deputy Governor Dao Minh Tu speaks at the Conference
In the coming time, in order to remove the difficulties and obstacles for the real estate companies, as well as the related organizations and individuals when accessing banks’ credit, the SBV would continue to operate the monetary policy in a proactive, flexible and effective manner in association with the fiscal policy and other macro-economic policies, contributing to maintaining the macro-economic stability, supporting the economic growth, creating favorable conditions for the stable and sustainable development of the economic sectors and fields, including the real estate sector in accordance with the orientations of the National Assembly, the Government and the Prime Minister.
In addition, the SBV will also continue to improve the legal frameworks on credit and banking operations in accordance with the actual situations to create favorable conditions for the people and businesses to access credit, including the real estate sector.
Besides, the SBV will keep on directing the credit institutions to control the credit risks for the high-end real estate segment, which is currently in excess supply; trading for speculation, the manipulation of the market, etc.
Also at the Conference, the representatives of the relevant Ministries, agencies, real estate companies, credit institutions and associations highly complimented the SBV’s measures of controlling the inflation and maintaining the macro-economic stability, thus contributing to the economic recovery in the context of difficulties and challenges in 2022. Over the past months, the SBV and the entire banking industry have also actively supported the development of the real estate market and the businesses in this sector.
Concluding the Conference, Governor Nguyen Thi Hong summarized and requested the relevant entities to focus on the following five main areas:
First, the SBV Governor affirmed that the Conference had received the close attention and guidance from the Government and the Prime Minister.
Second, the Conference on Credit for the Real Estate Sector had been one of a series of conferences on credit held by the SBV. Before the Tet Festival, the SBV had organized a Conference on Credit Solutions to promote the marketing, consumption and export of key agricultural products in the Mekong Delta. In the coming time, the SBV would organize several conferences on credit for other sectors, such as for small and medium enterprises, for agriculture and rural development, etc.
Third, the goal of the Conference was to assess the credit granting situation for the real estate sector, as well as the difficulties and obstacles related to credit in general and credit for the real estate sector in particular; thus, proposing solutions to remove the difficulties for the businesses and the people.
The SBV Governor also summarized 17 recommendations made by the real estate companies (as borrowers) to the banking sector at the Conference.
An overview of the Conference
Fourth, the representatives of the commercial banks had clearly explained about the difficulties, and suggested that the rescheduling of debt repayment and keeping the debt categories unchanged should be considered carefully from the perspective of systemic safety and NPL control.
On the other hand, the Ministry of Construction should clarify the concept of real estate speculation.
Over the past months, the great pressure for the banks’ credit was not due to credit management but due to the difficulties in the corporate bond market. The real estate companies need to structure their products more reasonably, and to make appropriate use of their capital, and consider to reduce the property prices to promote sale and earn more cash flows.
Finally, the banks had stated that they would continue to accompany and provide capital to the real estate companies on the basis of full compliance with the applicable laws, controlling risks and ensuring solvency for the depositors.
Fifth, regarding the credit policy management in 2023, the SBV Governor directed the SBV entities, the SBV municipal and provincial branches, and the credit institutions to strictly implement the guidance and instructions of the National Assembly, the Government and the Prime Minister; the directions of the SBV Governor as stipulated in Directive No. 01/CT-NHNN dated January 2023 on the arrangements for the implementation of the key tasks of the banking sector in 2023.
The Governor also requested the credit institutions to: enhance their efforts to reduce the operational costs in order to have more room to reduce the lending interest rates;
Concentrate credit on feasible projects and business plans; continue to provide credit for real estate projects that meet all legal requirements, especially social housing and affordable housing projects;
Actively review, classify and evaluate real estate projects to which they are providing credit in order to initiate appropriate solutions to handle and remove any difficulties and obstacles for each project;
Consider to grant credit to not only investors but also construction contractors, home buyers and producers providing construction materials to increase the capital flow movement and the liquidity for the real estate market; proactively and strictly control cash flows and the uses of the banks’ loans.
Control risks from granting credit to the high-end real estate segment with excess supply/property with no real demand, price manipulation, and manipulation of the real estate market.
Improve the quality of the appraisal and approval for credit granting, especially for the companies with real estate bonds that are due for payment, and invest in corporate bonds in full compliance with the SBV’s applicable regulations.
Regarding the preferential loans for social housing through the VBSP, the VBSP must put more efforts into implementing the preferential lending programs for social housing, housing loan programs for policy beneficiaries in accordance with the policy of the Government and the Prime Minister.
For the SBV entities, the SBV Governor requested the Department of Credit for Economic Sectors to prepare a report within the day to the Prime Minister on the results of the Conference. The Governor also directed the SBV branches to organize more bank-enterprise connection conferences;
The SBV entities were also requested to continue to review fully, consolidate and promptly advise the SBV leadership to resolve the difficulties for the real estate and also other sectors;
Continue to monitor and supervise the situations of credit granting to the real estate sector as well as any arising difficulties and problems in order to report to and advise the Governor to formulate prompt mechanisms and policies in line with the developments in the real estate market, contributing to maintaining the macro-economic stability and ensuring the safe and sound banking operations.
For the Ministries and agencies, the SBV Governor called for more attention and consistent implementation of the relevant measures.
For the companies as borrowers, they should accelerate the restructuring and enhance the corporate governance, strive for a balance between the targets of revenues/profits and the product marketability to make appropriate adjustments and to ensure financial capacity and the debt service; improve their financial capacity to diversify the possibilities to mobilize capital from other sources and to reduce their dependence on banks’ credit.
Actively participate in the implementation of social housing projects, housing for workers, and affordable housing with high efficiency in accordance with the policy of the Government.
Le Hang