Bad debt is still on the rise, especially the risk of bad debt in sectors with the ability to bury capital for a long time such as real estate is still one of the factors "reminding" banks about risk control. risks, especially with long-term credits. Accordingly, many banks are still looking for ways to increase long-term capital by issuing long-term bonds.
Preparing for many bond issuances
Information about bond issuance by banks has been happening quite a lot recently.
Agribank is one of the banking giants that is implementing a large-scale issuance of up to 10,000 billion VND. This is a public issuance with a term of 8 years and the interest rate is the reference interest rate plus a margin of 2%/year. The reference interest rate is the average 12-month personal savings deposit interest rate paid at the end of the term of banks in the Big 4 group (BIDV, Vietcombank, VietinBank, and Agribank) at the date of interest rate determination.
Previously in October 2023, a number of other banks also issued bonds with long terms. Specifically, MB Bank conducted 2 issuances this month, both with a 7-year term, with the total value of both issuances being 550 billion VND. The highest interest rate paid by MB to investors is the reference interest rate plus 2.5%/year, in which the reference interest rate is also the 12-month interest rate of the Big 4 group.
Meanwhile, Bac A Bank also issued a 100 billion VND 7-year bond issuance, with an interest rate of 2.8%/year plus reference interest rate, to open the possibility of a repurchase. Bonds that the issuer does not repurchase will have the interest rate raised to the reference level plus 3.8%/year. In addition, a number of other banks such as A Chau, An Binh, International... have also issued bonds with terms of 2 - 3 years.
The move to increase bond issuance activities by banks is placed in the context that pressure to increase medium and long-term capital is still increasing. Specifically, from October 2023, banks must comply with regulations on the ratio of short-term capital for medium and long-term loans to a maximum of 30%, instead of 34% as before. This is the content implemented according to the roadmap in Circular 08/2020/TT-NHNN.
The capital problem for real estate
The need for medium and long-term loan capital is mainly related to serving infrastructure investment projects, and industrial projects... In particular, real estate is also a field that is expecting a lot from capital sources. banks in both aspects of capital for business projects and capital for real estate consumption.
Recently, the Government Office has just issued Official Dispatch No. 9208/VPCP-CN dated November 23, 2023, sent to the State Bank (SBV) and the Ministry of Construction on social housing development policy. According to this official dispatch, the State Bank of Vietnam presides and coordinates with the Ministry of Construction to urgently report on the results of implementing the 120 trillion VND credit program for preferential loans to develop social housing, worker housing, and renovation. Rebuild apartment buildings under the direction of the Prime Minister.
Meanwhile, real estate businesses still appear to be "eagerly" waiting for the next capital solutions for this field. Recently, the City Real Estate Association. Ho Chi Minh City (HoREA) has sent a document to the Prime Minister and the State Bank of Vietnam reporting on the real estate market for the 10 months of 2023 and proposing a number of credit solutions to effectively implement the documents. direction and administration of the Government and Prime Minister, especially Official Dispatch No. 993/CD-TTg dated October 24, 2023. Accordingly, Mr. Le Hoang Chau - Chairman of HoREA, representatives of businesses continue to petition the State Bank to consider slightly "relaxing" loan conditions, expanding the number of subjects eligible for the 120 trillion VND credit package. …
The capital needs of real estate businesses continue to be a factor that increases the pressure on medium and long-term capital needs for banks. In particular, lending to this sector must still be based on controlling bad debt risks when the bad debt ratio in this sector has increased in recent times.
Ms. Ha Thu Giang - Director of the Credit Department for economic sectors under the State Bank of Vietnam, said that the economic situation is still difficult, business activities of enterprises as well as people's income are affected, leading to Real estate credit quality also has potential risks that need attention. The real estate credit bad debt ratio as of September 2023 (2.89%) has increased compared to December 31, 2022 (1.72%).
Credit structure within the real estate sector
According to the State Bank, by September 30, 2023, the total outstanding credit debt to the real estate sector of credit institutions reached 2.74 million billion VND, an increase of 6.04% compared to December 31, 2023. 2022, accounting for 21.46% of total outstanding debt to the economy.
Which real estate credit focuses on consumption/self-use purposes accounting for 64% and outstanding debt for real estate business activities accounts for 36% of outstanding credit debt in the real estate sector. In the first 9 months of 2023, real estate business credit increased faster than in previous years, but real estate consumer credit decreased.
(Thoi bao Tai chinh)