He made the statement during the 2022 Financial Forum themed “Strategies for Raising Business Capital in New Circumstances” organized by the Vietnam Chamber of Commerce and Industry (VCCI) and Business Forum Magazine in Ho Chi Minh- Town.
Vietnam Banking Association chief representative in Ho Chi Minh City said that in 2022 the Governor of the State Bank of Vietnam still maintains the 14% growth target, but creates conditions favorable for firms to borrow capital for production.
In the first eight months of 2022, credit growth is around 9.3%, which means that the remaining space is 4.7% of total loans outstanding, or the equivalent of 450 000 billion VND for production and commercial activities by the end of the year.
According to experts, credit growth in the first months of 2022 has increased by 1.5 times compared to the same period last year.
The State Bank of Vietnam has sent a message to keep the credit growth target of 14% unchanged and will continue to monitor the development of inflation to have a flexible monetary policy.
As a result, credit capital is expected to be tight in the last months of the year, especially capital for the real estate, securities and BOT trading sectors, which are subject to strict control policies for limit the risks.
Regarding capital for the real estate market, Hien said Vietnam’s economy is developing from a high capital intensity. For the use of capital in the real estate and construction sectors, the debt ratio has increased rapidly and 2021 is already at a risk threshold. This industry is very capital intensive (total capital increases significantly in relation to income).
He added that raising capital for the real estate sector in 2022 will continue to be difficult, but Dr. Dinh The Hien said that the mechanism for raising capital from real estate businesses is very favorable to other industries. Although credit capital is limited for the real estate sector, real estate companies still raise capital through corporate bonds. Statistics show that corporate bonds issued privately by real estate companies in the first seven months of 2022 reached VND 280.641 billion.
With the current economic model, the more credit commercial banks extend to real estate companies, the more capital-intensive they will be. Since the credit capital of commercial banks is currently 70% of the value of real estate capital, the average payback period is 10 years. Therefore, in the long term, it will be destabilizing.
Furthermore, in the real estate market, more than 70% are short-term investors who surf the market while mining real estate only represents a small percentage. Thus, when real estate prices slow down, liquidity drops sharply, which immediately affects bank cash.
Although credit capital in real estate accounts for only 10% (excluding bonds) of total commercial bank debt, the average payback period is around 10 years, which is 4 times higher than in industries. production and commercial, so it actually has a higher significant impact on commercial banks than other industries with the same loan, Hien said.
Based on these analyses, Mr. Hien said the real estate industry needs sustainable capital solutions. Specifically, the industry should reduce the demand for commercial bank credit by lending at a decreasing rate to non-priority segments while increasing the registered capital to increase resources, because a real estate company is an investment finance industry that needs financial strength through equity.
Issuance of bonds will increase pressure on debt repayment, so it is necessary for financial institutions to cooperate in the development of projects such as real estate trust funds and fund-enterprise cooperation on a project-by-project basis.
Mr. Nguyen Hoang Minh, Chief Representative of the Vietnam Banking Association in Ho Chi Minh City, acknowledged that the credit capital of banks is very important and necessary for the production and commercial activities of enterprises and individuals. .
State Bank of Vietnam Governor Nguyen Thi Hong still maintains the 14 percent growth target in 2022, but creates favorable conditions for companies to borrow capital for production and services, Minh said. business.