Commercial banks in Ho Chi Minh City are continuing providing loans to real estate traders despite a recent warning of a high risk made by the State Bank of Vietnam, state media reported February 20.
As of February 19, local banks had already lent real estate investors VND35 trillion (nearly US$2.2 billion), accounting for 10 per cent of their total outstanding loans.
The figure, in fact, is actually much higher because joint stock banks conceal information, fearing that the central bank may tighten real estate credit, said analysts.
The analyst estimation is that actual real estate lending by HCM City banks may reach VND100 trillion (US$6.25 billion), particularly when taking into account that the credit growth rate was nearly 40 per cent in 2007.
The city-based lenders said they are applying updated risk management systems in order to manage real estate lending, and that the central bank should limit its interference in banks’ operations.
According to Luu Duc Khanh, General Director of ABBank, all commercial banks have their own lending services, which are flexible and largely depend on lending conditions, and well understand when and how much to lend.
Khanh also added that banks are not at too much risk as they always set low prices when assessing the value of mortgaged houses.
“The central bank, thus, should not concern itself too much with the risks,” he said.
Analysts also said funding real estate investments is less risky than lending to securities investors, because the mortgaged assets for the loans are real property, the value of which increases day by day. However, they have warned that bankers are in danger of suffering heavy losses if the real estate market falls. (Vietnam & World Economy)
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