In the 2024 Investment Strategy report that MB Securities Company (MBS) just announced, analysts assess that in 2024 the economy will still face many challenges from the prolonged stagnation of the real estate market.
Real estate is considered a factor that will put pressure on the bond market and bad debt of the banking system. Although in 2023, the Government actively removed difficulties for this sector, the residential real estate market has not improved significantly in the last quarter of the year.
Analyzing the real estate market in 2023, MBS experts point out that the proportion of inventory and prepayment buyers on total assets of businesses was also in a downward trend due to the gloomy real estate market.
The value of inventory at the end of the third quarter of 2023 of listed real estate businesses reached 453.4 trillion VND, with almost no change compared to the beginning of the year, showing that real estate projects are temporarily paused. This will have a negative impact on business results and enterprises' capital will be "frozen" in unfinished projects. Furthermore, buyers paying in advance decreased by 5% over the same period, showing that businesses are still having difficulty opening and selling products.
The report from MBS also said that a prolonged gloomy real estate market will put pressure on the bond market as well as bad debt of the banking system. The estimated value of real estate bonds due in the fourth quarter of 2023 and 2024 is VND 12,172 billion and VND 125,305 billion, respectively, down 29% and 5% compared to before the acquisition.
"We estimate the total value of corporate bonds with delayed payment obligations to be about 192,000 billion VND, accounting for nearly 19% of the current outstanding corporate bond debt of the entire market, of which the real estate industry continues to accounts for the largest proportion of about 70% of the value of late payments," said a group of analysts from MBS.
Besides, the system's non-performing loan (NPL) ratio is tending to increase, and most of the risks come from the real estate sector. The NPL ratio of the banking system reached 2.2% in the third quarter of 2023, an increase of 64 basis points compared to 2022, and is the highest level since 2015.
Almost all banks continued to record an increase in NPL ratio in the third quarter of 2023 compared to the beginning of the year and previous quarters. Circular 02 of the State Bank on restructuring debt repayment terms and rescheduling debt has helped decelerate the NPL ratio and the decline in the loan loss provision ratio.
The NPL ratio of banks increased sharply from 1.4% at the end of 2022 to 2.1% at the end of the second quarter of 2023 but only increased by 10 basis points in the third quarter of 2023. The loan loss provision ratio decreased by more than 21% in the first 6 months of 2023 but only decreased by 5.8% in the third quarter of 2023.
Currently, nearly 70% of mortgage assets in the banking system are real estate assets. Therefore, if the gloomy real estate market lasts longer, other economic sectors cannot regain recovery momentum, and the pressure on bad debt from banks will increase, creating a bottleneck for economic growth.
Compiled by VietnamCredit