Bank loans to real estate business rise in H1 2023

According to the State Bank of Vietnam (SBV), loan transactions worth a considerable amount have been received by the real estate industry in the first half of this year. It has shown a remarkable growth rate of 17.4%, which is much higher than the growth rate recorded in the entire 2022, which was merely 10.7%.

According to recent statistics, the collective outstanding loans for the real estate industry among 17 publicly traded banks during the first half of 2023 skyrocketed up to VNĐ426 trillion. This staggering amount represents a significant increase of 36.2% from the previous year's figures. Furthermore, this sector's share of the banks' overall lending also jumped from 8% at the end of 2022 to an astounding 10% by the conclusion of the second quarter of 2023.

The increase indicated that banks were still investing money into the real estate industry even though there wasn't much improvement in the market.

Data shows that out of the 17 banks, 14 of them have seen a rise in their real estate loans in comparison to the start of the year.

SHB experienced the most significant surge in growth rate, going up from over VNĐ31 trillion to VNĐ59 trillion, which represents an 88.8 percent increase.

HDBank and Sacombank experienced a substantial increase in their outstanding real estate loans, with both reaching approximately 56%.

At the same time, there was a significant drop in the amount of loans given to real estate companies by several banks, including LPBank, PG Bank, and VIB. Specifically, LPBank's outstanding loans for this sector decreased by 49.1%, PG Bank's by 34.5%, and VIB's by 14.8% in comparison to the start of the year.

Techcombank was a prominent real estate lender with nearly 70 percent of its outstanding loans directed towards the fields of construction, real estate and construction materials.

During discussions with companies, officials from the State Bank of Vietnam (SBV) have consistently stated that they will not be restricting lending for real estate. As credit growth remains sluggish, banks are prioritizing providing businesses with greater ease of access to funding, including those in the real estate sector.

The SBV has recently made changes to Circular 06 based on suggestions from companies and the HCM City Real Estate Association. These changes involve suspending three key provisions that have had a major impact on the real estate industry.

Based on insights from the ACB Securities Company (ACBS), the pausing of the regulations will assist real estate companies in implementing reorganization.

Moreover, banks have a lawful pathway to provide loans to individuals who wish to purchase real estate without meeting the business requirements (such as a sales license), but have met the necessary legal prerequisites.

This circular will also support real estate companies in getting loans for investing in new projects, expanding their land area or making other investments. Nearly all real estate firms can take advantage of this suspension.

According to ACB's experts, the suspension will aid in sustaining credit expansion, as it has been lagging behind lately. The credit rate as of July has only risen by 4.56% since the start of this year, and dropped by 0.17% from June's end.