Outstanding loans against collateral in the form of securities or real estate in the first half of the year sharply increased over last year, according to a report from the State bank of Vietnam.

Outstanding loans and valuable paper discounted for securities investment surged 28.31 percent between December 31, 2008 and June 30, 2009 at credit institutions, the State Bank said.

Total outstanding real estate loans in the first half were also estimated to increase 10.48 percent from last December.

Despite the high increases in these higher-risk loans, the outstanding debt still met current regulations which provide that outstanding loans cannot exceed 20 percent of a credit institution’s charter capital, the State VBank said.

Bad debt ratios throughout the credit system in the first half of the year were still also under control, standing at 2.52 percent of total outstanding loans, an increase of 0.35 percent from late 2008.

“The performance of the entire system of credit institutions has remained safe while still allowing the increased provision of credit and services to the economy, contributing to higher confidence for domestic and foreign investor,” the State Bank report said.

The high increase in lending against securities and real estate collateral in the first half was mainly due to a sharp rise in such loans in May and June. Through the end of April, credit institutions reported that outstanding loans for securities had surged only about 4 percent, while lending against real property was down nearly 12 percent between December and April.

The State Bank also announced that, in addition to overall credit growth soaring during the first six months of the year by 17 percent, total payments during the period also surged by 16.36 percent, and banks’ total deposits also grew by 16.2 percent.

The State Bank projected that credit growth would surge roughly 25-27 percent for the year, with the strong growth due mainly to the impact of the Government’s subsidized-interest loan programme.

According to State Bank statistics, banks had loaned roughly 377.7 trillion VND (21.2 billion USD) under the programme through July 16, of which State-owned enterprises had borrowed 58.4 trillion VND (3.28 billion USD); private enterprises, including limited liability companies, joint-stock companies, and foreign-invested companies had borrowed 249.6 trillion VND (14 billion USD); and household businesses had borrowed 69.6 trillion VND (3.9 billion USD)./.