Concerns as credit flows strongly into the real estate market - Photo: QUANG DINH
Reports from a number of market research units indicate that most of the credit in the first months of this year is still driven by the real estate industry.
Many real estate businesses increase loans
Statistical According to Tuoi Tre Online , based on financial reports of nearly 80 enterprises in the real estate management and development industry (excluding Vingroup), total debt (loans and financial leasing debt) at the end of the second quarter of 2024 reached more than VND 245,640 billion.
This figure increased by only 10% compared to the beginning of the year, but increased by 52% compared to the end of 2020.
The data includes short-term and long-term debt based on financial reports of nearly 80 listed enterprises in the field of real estate management and development (mainly bank loans, bonds, financial leases...)
Notably, the top 12 enterprises with the largest outstanding loans account for more than 80% of the total outstanding loans of this entire group.
At the end of the second quarter of this year, most of these large enterprises tended to increase their debt compared to the beginning of the year. Only 3 units went "in the opposite direction".
Data: Corporate Financial Statements
Of which, the fastest debt growth rate is at Construction Development Investment Joint Stock Corporation - DIC Group (DIG), with about 39% compared to the end of last year.
Next is Phat Dat (PDR) with an increase of nearly 35% after 6 months. Nha Khang Dien and Van Phu Invest are also businesses with outstanding loans growing by double digits compared to the end of last year.
On the contrary, some businesses on the stock exchange have "cleaned up" their debt. Accordingly, the data on the financial report for the second quarter of 2024 no longer records any debt in the loan and financial lease debt section.
For example, Sonadezi Giang Dien (SZG), Hoang Huy Service Investment Joint Stock Company (HHS), Tu Liem Urban Development Joint Stock Company (NTL)...
In addition, there are many other enterprises with low and decreasing outstanding loans such as Nam Tan Uyen Industrial Park Joint Stock Company (NTC), Nam Mekong Group Joint Stock Company (VC3)...
Things to note when debt increases
Risks can arise when businesses borrow too much. Meanwhile, real estate lending rates are often higher than the general market level. Interest costs can "erode" business profits in unfavorable business conditions. It is not for nothing that many business leaders have revealed that their big goal is to "clean up" their debt.
When debt is too large compared to equity, not only the enterprise but also the "creditors" will be worried. Auditors also often doubt the ability of a business to continue operating when this unit is in a situation where its liabilities are larger than its assets.
One of the important indicators to evaluate the health of a business is D/E - short for Debt to Equity ratio.
D/E takes 1 as the standard. When this ratio is greater than 1, it means that the enterprise has more debt than equity. Another index used to evaluate the health of the enterprise is the debt balance/total assets - DAR (D/A).
DAR is too high, indicating that the business does not have enough financial strength, but mainly borrows to do business. However, if DAR is too low, other factors need to be considered to assess whether the business has not taken advantage of capital mobilization channels.
According to VPBanks Securities experts, real estate is an attractive sector for bank lending due to high and stable demand, along with strong collateral.
However, growth may not be sustainable, creating risks as asset values decline. Not to mention long-term real estate loans, which can tie up capital and limit banks’ ability to pursue profitable opportunities.
Another expert told Tuoi Tre that they should not try to "push" credit growth to reach 14% this year. This is because it can easily create risks when banks "run" credit KPIs, thereby disbursing more heavily into loans to buy speculative real estate, increasing the risk of "bubbles" in the context of low interest rates and cheap money.
Source: https://tuoitre.vn/loat-dai-gia-bat-dong-san-tang-vay-khoi-no-phinh-to-gan-10-ti-usd-20240903135729445.htm
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