Investment in corporate bonds
With regard to loans to credit institutions, the Ministry of Finance (MOF) indicated that in April 2022, loans granted to finance investments in securities represented 0.5% of total outstanding loans, mainly loans. short-term loans (98%) and used loans. invest in government bonds.
Total investment in corporate bonds by credit institutions reached 320.4 trillion VND, which accounted for only a small proportion, 2.86%, of total outstanding loans. This shows that investments by credit institutions in corporate bonds are still under control.
In an effort to control risks related to securities and corporate bonds, to ensure the safety of credit institutions, SBV indicated that the legal framework has been gradually improved with stricter regulations.
When issuing bonds, credit institutions must comply with the regulations stipulated in the securities law and the legal documents that guide the application of the law, and at the same time comply with the regulations on the ratios of security in force as prescribed.
The central bank has also strengthened the review, inspection and monitoring of credit granted to finance banks’ investments in corporate securities and bonds, to uncover risks and take corrective action.
SBV asked credit institutions to reassess credit granting activities, use risk management measures, improve the effectiveness of internal reviews on credit granting, including to private companies, large real estate companies and related persons in order to minimize risks.
Regarding the existing issues, SBV said that the risks of the securities and corporate bond market mainly come from the operations of listed companies and bond issuers (under the leadership of other ministries and branches). The inspection and supervision of bank operations related to the field is only one risk management measure of banks.
Therefore, there should be comprehensive measures with the cooperation of relevant ministries and branches to make the stock market and corporate bond market “clean” and healthy, according to SBV.
The SBV said it is considering changing some regulations that govern the purchase and sale of corporate bonds by credit institutions, and tightening administrative requirements and standards for credit institutions when they join. the corporate bond market to provide safety and help the market grow in a sustainable manner.
The central bank has also stepped up inspection and monitoring of corporate bond investments, applied measures to uncover risks and violations, and issued warnings whenever risks are detected.
2.2 quadrillion VND of loans to the real estate sector
SBV reported that at the end of April 2022, the total outstanding loans to the real estate sector reached VND 2,288,278 billion, an increase of 10.19% compared to the end of 2021, accounting for 20.44% of the total outstanding loans of the whole economy. , while the bad debt ratio was 1.62%.
SBV asserts that real estate is one of the risky sectors for banking operations and requires strict control.
The strong fluctuations of the real estate market, the inflation of real estate prices and the abnormally high prices of land auctions affect the granting of loans and the valuation of mortgaged assets.
The supply of credit to the real estate sector as well as the quality of credit are still under control. However, in order to minimize the negative impact of the real estate market on the macroeconomy, SBV believes that there should be comprehensive solutions with the coordination of relevant ministries, departments and sectors to ensure a healthy, safe and sustainable real estate market.
According to the SBV, around 94% of the outstanding loans granted to the real estate sector are medium and long-term loans (10-25 years), while banks’ capital is mainly short-term capital. The difference in deposit and lending conditions and in interest rates presents high risks for banks.
As for a plan for the immediate time being, the central bank will continue to direct banks to expand credit in a safe and efficient manner; closely monitor loans granted to risky sectors of activity, including investments in real estate.
At the same time, it will create favorable conditions for institutions and individuals to access bank loans to purchase houses for their own accommodation, especially social housing products, houses for workers and low-cost commercial housing. .