Which banks and real estate businesses will benefit from Circular 10 of the State Bank?

ANTD.VN - Most real estate businesses can benefit from Circular 10. However, real estate businesses expected to benefit the most include Novaland, Phat Dat, Dat Xanh...

Temporary move

The State Bank of Vietnam has just issued Circular No. 10/2023/TT-NHNN amending Circular No. 06/2023/TT-NHNN. Accordingly, the effective date of Clause 8, Clause 9 and Clause 10 of Article 8 of Circular No. 39/2016/TT-NHNN (supplemented by Clause 2, Article 1 of Circular No. 06/2023/TT-NHNN) will be temporarily suspended, instead of being applied from September 1, 2023.

In fact, clauses 8, 9, and 10 were issued with the ultimate purpose of controlling credit quality through controlling the purpose of capital use of customers, in order to ensure the safety of the credit institution system.

According to experts from Dragon Viet Securities (VDSC), from the perspective of credit provision, Circular 06/2023/TT-NHNN has intervened quite deeply to control credit provision to the real estate sector.

After the tightening of the bond channel, credit for the real estate sector continued to increase very strongly, outstanding real estate business loans in the first 6 months of 2023 grew (17.41%) exceeding the growth rate of the whole year 2022 (10.73%).

“This implies that real estate credit is concentrating on a number of larger-scale projects while the overall number of licensed and qualified projects is decreasing sharply. If the current situation continues, it will also create concentration risks and may cause a higher risk of bad debt in the future,” VDSC experts said.

In fact, the bad debt ratio of the whole industry (statistics of 27 listed banks) is at 2.07%, an increase of 0.57% compared to the second quarter of 2022. In particular, bad debt in the real estate sector is tending to increase higher than the system average and reached 2.47% (same period was 1.53%). By the end of July 2023, the restructured debt according to Circular 02/2023/TT-NHNN is about VND 96,000 billion for 97,000 customers, much higher than the figure calculated by the end of June 2023 (about VND 62,464 billion for 18,846 customers).

Which banks and real estate businesses will benefit from Circular 10 of the State Bank? photo 1

Banks with a high proportion of real estate loans will be more proactive in credit disbursement thanks to Circular 10.

However, in response to the petition of businesses and associations related to real estate, claiming that the above regulations have created "barriers" in accessing credit, at the same time, following the direction of the Government, the State Bank has amended this Circular.

According to VDSC, Circular No. 10 is a temporary step, with a long delay to support the restructuring process of real estate enterprises.

“The loose monetary policy should aim at the overall development of the economy, however, in reality the economy depends heavily on the real estate sector. Therefore, sustainable growth can only be achieved when the policies and business environment of the real estate sector are more open, transparent and fair. In the long term, the dependence on the real estate sector also needs to gradually decrease, instead of initiating new models and industries with innovation, creativity and higher added value,” the VDSC report emphasized.

Which businesses and banks will benefit?

Experts from ACB Securities (ACBS) also believe that Circular 10's temporary suspension of the above items will support struggling real estate businesses to have the opportunity to restructure through transferring capital in projects to investors with better operational capacity or through a business cooperation mechanism with partners.

In addition, banks also have a legal corridor to be able to lend to real estate buyers who do not have enough business conditions (sales license), but have enough legal conditions.

In addition, this will also support real estate businesses in borrowing to invest, expand land funds or invest in a new project.

Therefore, experts believe that most real estate businesses can benefit from this Circular. However, real estate businesses expected to benefit the most include Novaland, Phat Dat, and Dat Xanh.

Regarding the impact on the banking industry, ACBS believes that the above adjustments will contribute to supporting credit growth, which has been low recently (by the end of July, it only increased by 4.56% compared to the beginning of the year, down 0.17% compared to the end of June).

In reality, each bank will have its own risk appetite and may still not actively disburse for projects and loans that they assess as high risk. Meanwhile, the newly issued Circular will create a legal corridor and favorable conditions for credit disbursement for banks that prefer lending to the real estate sector.

According to ACBS, at the end of June 2023, banks with a high proportion of outstanding loans to the real estate and construction sector included Techcombank (35.5%), LPBank (31.6%), SHB (27.3%), VPBank (22.5%), HDBank (19.0%) and MSB (17.9%).

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