Property development loans drive credit growth at banks

VPBank, which led the banking sector with 25.53% credit growth, saw property development loans surging 50%, equivalent to an increase of VND27 trillion (US$1.11 billion) in the first nine months, the fastest growth rate among all loan categories.

Property development accounts for 17.5% of all loans at the bank, behind household business and property purchases.

The same trend was seen at Techcombank, where property development accounted for 34.63% of all loans, an 8-percentage-point increase since the beginning of the year.

Loans to this category increased by VND50 trillion in the first nine months, the biggest expansion of all categories.

HDBank’s loan given to property developers increased by VND15 trillion, and the ratio rose from 8.5% to 12.9%.

SHB’s property development loans doubled in the period to VND66 trillion, second only to car and motorbike business loans.

The trend indicated that loans to major businesses remain a key component to credit growth, even though some banks have been looking to increase the ratio of individual loans.

Techcombank CEO Jens Lottner said that although the bank wants to increase retail loans and does not want to expand its credit categories to large businesses, the current market situation is not suitable.

"High loan interest rates are acting as barriers to small retail businesses while large corporations are able to afford the high costs," Lottner said, adding that when the situation changes the bank will prioritize retail customers.