Consumer lending in 2017 surged sharply by 65 per cent compared to 50.2 per cent in 2016, according to estimates of the National Financial Supervisory Commission (NFSC).

The proportion of consumer credit in total outstanding loan of the entire banking system was estimated at 18 per cent in 2017, up from 12.3 per cent in 2016. Of this, home loans accounted for 52.9 per cent. Lending for home appliances and transport vehicles made up 15.3 per cent and 8.3 per cent, respectively.

Nguyen Van Thuy, deputy director of NFSC’s general supervisory division, attributed the sharp surge in consumer credit to a high demand for housing, arising from a young population and urbanisation.

Besides this, a large portion of the population was gradually moving from cash payments to bank payments and were willing to borrow for their lifestyle needs, Thuy said.

The report also said the consumer credit market share of commercial banks increased from 39 per cent in 2016 to 45.7 per cent at the end of 2017, while the rates at joint stock commercial banks and financial companies decreased slightly from 47 per cent in 2016 to 42 per cent by end-2017.

Thùy said that the consumer credit would remain a potential and strategic area of credit institutions and was forecast to witness high growth next time.

Economist Le Xuan Nghia said consumer lending was a global trend, citing Europe as an example where consumer credit accounted for some 71 per cent of total bank loans.

The proportion of consumer lending in Viet Nam’s economy was lower than that of other countries with medium income. Viet Nam’s consumer loan was 18 per cent against 30 per cent in other countries.

To seize the trend, banks needed to form a safe database of customers with the help of improved information technology, Nghia said, to avoid landing in a soup due to the changing information of individual customers.

Nghia emphasised that despite the high growth rate of consumer lending, the risk was considerably low.

He said that in a recent meeting with the Prime Minister, the National Monetary and Financial Policy Advisory Council suggested that according to the global trend, Viet Nam needed to further develop consumer credit to boost the domestic market, which would help support local business and production. It also underlined that the country needed to control the risk of consumer lending.

The NFSC report also showed that Viet Nam’s credit growth in 2017 was estimated at some 18.7-19.3 per cent, of which medium- and long-term loans decreased after remaining high during 2013-16, accounting for 53.7 per cent of the total lending.

In terms of economic sectors, agriculture loans increased slightly by 18.7 per cent, while that of industry, commerce and services increased by 21.8 per cent. The past year also saw a slight decrease in real estate and construction lending. — VNS