The authority aims at directing capital flows towards manufacturing and business sectors and reducing capital flows into risky non-production sectors, including real estate, according to Bao Viet Securities Company (BVSC). 


Under this circumstance, quality of lending to real estate sector could be rigorously monitored from 2019. 

In 2019, credit growth target for banks is 14%, unchanged from the performance in 2018. Therefore, lending to real estate in 2019 could be relatively lower than in 2018, stated BVSC in its latest report. 

Moreover, the ceiling for short-term funds used for medium- and long-term lending is also tightened. Since early January 2019, banks have lowered the cap on short-term funds used for medium- and long-term lending to 40%. 

The internal non-performing loan (NPL) ratio must also be reduced to 2%, potential risk sectors will also be strictly monitored. The risk factor for real estate loans will increase from 150% to 200%. 

This source of lending will not only hinder the business of real estate enterprises but also individuals who borrow to buy home. Apparently, these policy changes of the authority are of great importance amid active trade of real estate sector in 2018. 

BVSC expected that real estate growth will suffer a slowdown from 193.2% in 2018 to 43.6% in 2019. 

Total outstanding credit in Vietnam’s banking system grew 14% in 2018 year-on-year, the lowest since 2014, according to the State Bank of Vietnam. However, the Vietnamese economy grew at a decade-high of 7.08% last year.