[NEWS] - Interest rates fall quickly, idle money still flows into the bank

The State Bank of Vietnam has published data on customer deposits at credit institutions until the end of March 2023, showing rather surprising numbers. Accordingly, while deposits at economic organizations decreased sharply by 4.87% compared to the end of last year when reaching more than 5.66 million billion VND, deposits of the population increased sharply by 7.08% and reached more than 6.28 million billion VND.

From the beginning of the year to June this year, residents’ deposits exceeded 6 million billion VND and continuously increased. In 3 months of this year, people have deposited into the banking system an additional 415,000 billion dong.

People’s deposits into the banking system increased in the context of high savings interest rates in the late 2022 and early 2023 period. From mid-March to June, the State Bank of Vietnam started to reduce the operating interest rates and after 3 months, there have been 3 times of lowering the operating interest rate.

During this time, deposit interest rates tended to decrease rapidly. Many banks only mobilize to the highest interest rate of about 8%/year in the joint-stock commercial banks, while the highest interest rate of state-owned commercial banks is around 6.8%/year. 

Some analysts show that people’s deposits into the banking system increase rapidly when other investment channels such as securities, real estate, gold, and foreign currencies... are not attractive. The current stock market has only started for about 2 months now and officially surpassed the 1,100-point mark at the beginning of this June.

Meanwhile, deposits of economic organizations decreased sharply compared to the end of last year, reflecting the difficulties that forced businesses to withdraw savings and payment deposits to pay for business activities, products, and services. production and investment instead of "rich" cash as before.

Analysts from SSI Securities Company said that the deposit interest rate level continues to cool down at tenors, but the ability to differentiate between groups of state-owned commercial banks and joint-stock banks for a term of 6 months or more.

In the published June strategy report, Yuanta Securities Vietnam stated that the general interest rate for 12-month term deposits listed at commercial banks has fallen to less than 8 %/year. The State Bank of Vietnam has asked banks to reduce lending rates with the use of credit lines for management. Therefore, interest rates are continuously decreasing, but lending rates still lag because credit growth is quite slow.

Hoang Yen (Collection source)