Increasing chartered capital is the most important task for the four state-owned commercial banks. If their CARs are lower than Basel II standards, they will have to restrict lending.
The ‘big four’, including Vietcombank, BIDV, Agribank and VietinBank, now feel pressure as their CARs have been declining over the last few years.
Agribank’s CAR at the end of March was 6.9 percent and it is likely to fall to 6.1 percent by 2021 if it cannot raise charter capital, far from the minimum required CAR of 8 percent.
As for VietinBank, the CAR was 9.25 percent if calculating in accordance with the guidance in Circular 36. The figure would be lower under Circular 41.
The CARs of Vietcombank and BIDV are also low. They tried to increase capital by issuing additional shares and bonds to increase 2-tier capital. But the issuance campaigns were below expectations.
|The four state-owned banks account for 40 percent of the total credit market share. Their failure to increase charter capital not only leads to smaller market share, but will also affect credit to the whole economy.|
The four state-owned banks account for 40 percent of the total credit market share. Their failure to increase charter capital not only leads to smaller market share, but will also affect credit to the whole economy.
“Covid-19 has big impact on the economy, and ensuring the safety and health of the banking system has become extremely important. Only a powerful banking system can support the economy,” said Can Van Luc, chief economist of BIDV.
In the case of Agribank, for example, if it is allocated VND3.5 trillion in Q3, the outstanding loans would increase by VND60 trillion which means the profit would increase by VND1.2 trillion and the tax to the state would increase by VND500 billion. If so, the state’s capital would increase by VND380 billion.
Nguyen Thi Phuong, deputy CEO of Agribank, said if the bank cannot raise capital to satisfy Basel II standards, its ability to provide capital and reduce interest rates to support customers will decrease.
As Agribank provides 50 percent of loans in rural areas, its decreases in providing capital will adversely affect the production and income of millions of clients who are individuals and business households in rural areas.
Agribank’s capital increase plan is expected to receive National Assembly’s approval soon. To date, 18 banks in Vietnam, including two foreign and 16 Vietnamese banks, have been approved to apply Basel II as stipulated in Circular 41.
The banks can satisfy the requirement on the minimum CAR of 8 percent. Techcombank’s CAR is 16.6 percent, VP Bank 11.1, HD Bank and MB Bank 11, ACB 10.9 and MSB 10.25 percent.
The State Bank of Vietnam plans to grant higher credit growth rate limits than the average limit to these banks, which means opportunities for the banks to expand market share.
Ministry warns about online lending apps
HÀ NỘI — The Ministry of Public Security has warned about the risk of black credit provided by online lending applications which could threaten social security.
Online lending apps provide trust-based loans in which the borrowers do not need mortgage assets. Transactions were conducted online via websites, online exchanges and apps installed on smartphones.
The borrowing and lending process through the apps was very easy, as people who want to borrow money only have to complete some simple registration procedures including downloading the app, filling in personal information including an account number to receive money, uploading a photo and identity cards, and allowing the app to access their personal contacts.
However, the ministry warned that many lending apps turned out to be a form of black credit with cut-throat interest rates, which might have unintended consequences and affect social security.
The ministry urged borrowers to study online lending providers together with contract terms carefully to avoid risks.
Việt Nam was developing a sandbox for financial technologies, including peer-to-peer (P2P) lending, which was critical to ensure fintech development remains on track.
There are around 40 companies providing P2P lending services in the country. —
Sóc Trăng exports jump 26% despite pandemic
MEKONG DELTA — The Cửu Long (Mekong) Delta province of Sóc Trăng’s exports in the first six months of the year increased by 26 per cent year-on-year to US$470 million.
Seafood accounted for $332 million, a 24.8 per cent increase, and rice for $97 million, 2.2 times higher.
Võ Văn Chiêu, director of the provincial Department of Industry and Trade, said seafood exports had been sustained despite the difficulties caused by the COVID-19 pandemic thanks to efforts to control it.
Võ Văn Phục, director of the Việt Nam Clean Fishery JSC, one of the biggest exporters in the province, said shrimp exports would increase by 50 per cent in July from the same period last year thanks to Việt Nam controlling the disease outbreak.
Businesses in Sóc Trăng have methodically invested, branded and built value chains, and so the province’s exports increased even when the export markets were plagued by difficulties.
The province has set this year’s export target of $900 million, $670 million from seafood.
To meet it, it encourages firms to expand markets, improve design and quality, and diversify products to meet various consumer demands. —
Hà Nội condominium market has recovery of sales in Q2
HÀ NỘI — The new launch of condominiums in the second quarter of this year (Q2) nearly tripled that of the previous quarter, showing recovery of sales activities, according to CBRE Việt Nam’s quarterly report on the Hà Nội market released on Tuesday at an online press conference.
In terms of segments, 88 per cent of units launched in Q2 were in the mid-end segment while the remainder were high-end products.
Sales momentum was relatively positive in Q2 compared to the previous quarter, with more than 50 per cent of units launched during the quarter having been absorbed.
In Q2, there were a total of 5,100 sold units, more than double that of the previous quarter. The sales picked up in Q2 thanks to the social distancing order removed.
Diversification in sales channels such as online channels combined with direct marketing via sales events has boosted sales during the quarter, according to CBRE.
Especially, applications in project management and online sales have been successfully developed by many companies. Those technology platforms help to introduce projects, deal with customers and carry out online sales process.
In addition, investors and property trading floors can also receive sales data and information analysis to build suitable sales and marketing strategy, Robert Vũ, CEO of batdongsan.com.vn, a popular property website in Việt Nam, said on Wednesday at a press conference releasing a report on the domestic property market in Q2.
Local buyers are the key focus of developers during the first half of the year as foreign sales have been disrupted due to the suspension of international flights.
The segment of property for foreigners buying or renting significantly slowed down due to the reduced number of foreigners travelling in Việt Nam and a significant amount of foreigners going home due to the COVID-19 pandemic, Nguyễn Hoài An, director of Hanoi Branch, CBRE Vietnam told Việt Nam News.
“However, in the Hà Nội market, there were many experts of foreign companies coming back to work in Việt Nam by charter flights. Therefore, the experts must rent serviced apartments and hotels, leading to occupancy rates in many serviced apartment projects increasing from the end of the second quarter.”
The hotel segment in Hà Nội was in a better situation, although it still struggles, she said.
“The prospects of this property market for foreign customers would depend on the ability to re-open international flights and borders between Việt Nam and other countries,” An said.
The CBRE also reported that the Hà Nội market had about 5,600 units launched in Q2, leading to a total new launch during the first half of around 7,200 units – down 65 per cent year on year (y-o-y).
The new supply in the first six months declined significantly compared to the same period of last year due to COVID-19 disruption, said CBRE Việt Nam.
Selling prices in the primary market in Q2 averaged US$1,379 per sq.m (net of VAT), up by 3 per cent y-o-y. While mid-end products from township developments see higher selling prices due to an increasing amount of amenities, landscape and infrastructure, this segment witnessed the highest y-o-y growth of 4 per cent among segments.
The level of new supply is expected to stay at around 18,000-20,000 units in 2020, lower than 30,000 units at annual average for many years, according to the CBRE.
Nguyễn Hoài An, director of Hanoi Branch, CBRE Vietnam said that: “The lower level of new supply this year allows sales to catch up quicker with the new launch which had remained at a high-level over the past five years.”
This year, total sold units might be lowered to around 15,000-17,000 units in Hà Nội due to modest sales performance in the first half of this year.
The primary pricing is forecast to remain flat in the second half of this year since new supply is heavily dominated by mid-end segment and higher competition in this segment making it harder to escalate selling prices.
According to batdongsan.com.vn, the number of searches for mini apartments (with an area of less than 45sq.m) at the end of Q2 increased by more than 200 per cent compared to February 2020.
This reflects the growing trend of more young people and families wishing to own affordable apartments. This is also a reason for investors to build studio apartments and mini apartments, according to this website. —
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