Individual customers’ deposits continue to flow into the banking system despite savings interest rates remaining low.
Deposits Reach Record High
According to recent data from the State Bank of Vietnam (SBV), as of the end of August, citizens have deposited over VND 6,924 trillion, marking a 6% increase compared to the end of 2023. In August alone, banks mobilized an additional VND 86 trillion from individuals, bringing the total increase in deposits since the beginning of the year to over VND 392 trillion. This marks the second consecutive month of growth. On average, individual customers deposited over VND 2.866 trillion per day in August, four times the average daily amount of the previous month, which was only VND 700 billion per day. Over the first eight months of 2024, residential deposits showed positive growth each month, with January as the only exception, showing a decline. Notably, individual deposits have surpassed those of economic organizations.
Not only individual deposits but also deposits from economic organizations increased in August by VND 68 trillion from the previous month, reaching VND 6.836 trillion. However, compared to the end of 2023, deposits from organizations still recorded a decrease of 0.05% (down by VND 5 trillion). Over the first eight months, organizational deposits continuously showed negative growth, with June as the only month with positive growth.
The total payment instruments in August increased by VND 257 trillion from the previous month, raising the growth compared to the end of 2023 to 4.12%, reaching VND 16.658 trillion. Among this, deposits from individuals and economic organizations reached a record level of more than VND 13.762 trillion. According to data from the SBV, total deposits by the end of October were estimated at VND 14.5 trillion, indicating continued deposit growth in September and October.
In Ho Chi Minh City, the capital mobilization rate by banks outpaced lending. The SBV branch in Ho Chi Minh City reported that credit growth over the ten months reached 6.87%, while banks’ capital mobilization increased by 8.9% compared to the end of 2023. Loan outstanding balances amounted to VND 3.7 trillion, while deposit mobilization reached VND 3.8 trillion.
Notably, individual deposits continue flowing into banks despite low savings interest rates, even though deposit interest rates began to increase slightly in April. Moving into November, some banks raised their deposit rates by about 0.1-0.6%, but current deposit interest rates remain between 5-7% per year for 12-month terms and 4.5-5% per year for 6-9 month terms.
Idle Money Seeking an Outlet
Assoc. Prof. Dr. Nguyen Huu Huan from the University of Economics Ho Chi Minh City noted that this trend suggests that savings deposits remain a safe haven while waiting for other investment channels to become more attractive. Currently, real estate and stocks are still unappealing, and while gold prices rose significantly in 2024, people with available funds have found it difficult to purchase. “A friend of mine has VND 8 billion in bank deposits. When gold prices were around VND 80 million per tael, he planned to shift his savings into gold. However, banks and gold trading companies only sold small amounts—one tael at a time—making it uncertain how long it would take to buy 100 taels. Unable to purchase gold, he continued depositing his money in the bank at a 6% interest rate, earning VND 35 million in interest monthly,” Huan explained.
In reality, among investment channels, gold has seen the strongest price increase. As of now, SJC gold bars have risen by VND 10 million per tael (equivalent to a 13.5% increase), with peaks of up to VND 18 million per tael (a 24.3% increase). On November 13, SJC gold trading units were buying at VND 80.5 million per tael and selling at VND 84 million. Meanwhile, gold prices in the free market were down VND 1 million per tael compared to official systems, with SJC gold bars selling for approximately VND 83 million per tael and buying at VND 82 million. For those holding gold rings, the price increase ranged from VND 20 to 27 million per tael (up 31.5% to 42%). On November 13, the buying price of gold rings hovered around VND 80.8 – 81.2 million, with selling prices from VND 83 – 83.2 million. However, as mentioned, low liquidity and difficulty in buying and selling remain limitations for this investment channel.
Regarding the increase in organizational deposits, Mr. Nguyen Huu Huan expressed some doubts. He noted that the rise in August might be seasonal, as funds are received for payments but not yet allocated to production or business activities. However, the increase in organizational deposits in September and October is concerning because the end of the year is typically a period of higher individual spending, which generally leads to a slower growth in both individual and organizational deposits toward year-end.
Sharing the same view, financial expert Huynh Trung Minh believes that as other investment channels still carry risks, cash flow temporarily seeks safety in savings. For instance, real estate prices in certain areas are currently high, deterring investors. Additionally, real estate companies are facing financial difficulties, so when launching new projects, individuals are cautious, weighing various factors before deciding to invest. As for stocks, not everyone has enough knowledge to risk investing.
“In fact, the gold market has been the most dynamic in 2024, with prices fluctuating continuously. However, the domestic gold market is regulated, making it difficult to purchase gold. Moreover, individuals are only allowed to buy one tael at a time, and purchasing in larger quantities requires turning to the free market. However, regulations only permit SJC gold bars to be traded at licensed outlets, meaning buying and selling SJC gold bars in the free market is illegal and may result in fines or confiscation, similar to foreign currency violations. Additionally, many forecasts indicate that global gold prices will continue to fluctuate, especially as U.S. President-elect Donald Trump implements new economic policies. This could lead to significant gold price swings in the near future,” Minh explained.
Source: thanhnien.vn
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Source: Vietnam Insider