Banks rush to stimulate demand for personal credit

03-Dec-2020 Intellasia | Bao Dau tu | 6:02 AM Print This Post

According to the Credit Department of Economic Sectors (State Bank of Vietnam), as of November 18, 2020, the credit balance of the whole system increased by 7.39 percent compared to the end of 2019, or an increase of 1.3 percent with the end of September 2020. Although it has flourished again, credit in general has still grown slowly, while mobilised capital is still flowing into banks.

Excess capital, while production and business credit increased slowly, many banks are turning to focus on personal loans, especially home loans and car purchases. The race to stimulate demand for home and car loans from banks has made lending interest rates in this sector the cheapest in the past 10 years.

For example, Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) is providing car loans to small and medium enterprises with interest rates from only 5.9 percent for three months, 6.9 percent per year for six months and 8.3 percent per year for a period of 12 month. Individual customers who borrow 24 months to buy a car also only have to pay interest rate of 8.5 percent per year. Similarly, home loan customers at Techcombank are entitled to interest rate for the first 12-month fixed package from 7.59 percent per year, 24-month term at about 8.6 percent per year. After a fixed period, interest rates fluctuate from 9.3 percent to more than 11 percent per year.

In the market, a series of banks such as VIB, TPBank, Vietcombank, BIDV, Agribank, Shinhan Bank… have launched very preferential loan packages to buy houses and cars. Nguyen Duc Vinh, VPBank’s general director, said that the growth driver of banks in this period was personal credit and small and medium-sized enterprise credit. From the beginning of the fourth quarter of 2020, VPBank has accelerated the growth of this segment. It is expected that the total outstanding loans to individuals and small and medium enterprises in 2020 will increase about 10 trillion dong compared to last year.

In fact, there is not only a lot of room left, but home loans and car purchases also help the bank improve the profit margin (NIM), which has decreased significantly since the beginning of the year, thereby improving profits. Dr Can Van Luc, chief economist of BIDV, said that Covid-19 was a challenge, but also a test for banks. The selection of good customer segments and good products in the context of gradual economic recovery after the translation will help banks thrive. However, this requires flexibility in choosing product strategies, customer segments, and effective risk control.

The bank’s rampant lending to buy houses and cars makes many people worry that consumer lending is hot again and contains many hidden risks. However, a representative of the State Bank said that it is not really worrying that the bank boosts buying houses and cars. According to Nguyen Tuan Anh, director of the Credit Department for Economic Sectors (State Bank of Vietnam- SBV), this agency does not restrict credit institutions from expanding consumer loans, including car loans and home purchases. with individuals. “Banks promoting consumer lending are still safe, there is nothing to warn about. All consumer loans hidden under speculative loans, real estate investments are under very strict control of SBV “, Tuan Anh affirmed.

Meanwhile, Ho Hung Anh, Chair of the Board of directors of Techcombank – one of the biggest banks in real estate lending since the beginning of the year confirmed that Techcombank mainly lends houses with collateral, again clearly delineate loans for real estate investment businesses and loans to buy houses, so the risk can be completely controlled.

In fact, from the beginning of the year until now, many banks have boosted lending for houses and cars such as Techcombank, VPBank, and TPBank…, but bad debts are still under control, even decreasing compared to the same period last year. However, experts still warn, banks must not neglect to remind credit staff to carefully appraise customers’ records, to avoid approving loan applications “overdue”, leading to inability of customers to pay payment, forcing banks to tighten debts, causing an offensive look. Of course, on the part of the borrower, it is also necessary to carefully calculate his ability to repay debt before signing a loan agreement.

“To ensure the solvency, the borrower must accumulate 20-30 percent of the value of the house and car in advance and must rely on their income to make a detailed debt repayment plan, to avoid life reversal due to debt repayment pressure, stick to bank bad debts “, Dr Can Van Luc recommends.

 

Category: Finance, Vietnam

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