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Tuesday, July 16, 2024

Bank deposits increase slowly due to interest rate cuts

The Saigon Times

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HCMC – Deposits at local banks continued to grow in May, albeit at a slower pace than in previous months due to ongoing reductions in interest rates, according to the State Bank of Vietnam (SBV).

By the end of May, individuals’ deposits had reached VND6,347 trillion, an 8.7% increase or an additional VND15 trillion compared to the beginning of the year.

However, May marked the month with the lowest increase in individual deposits, as the additional amount recorded was only VND14,700 billion, which is less than one-tenth of the amount in January.

In January, the banking system posted a surge of VND178,000 billion in deposits versus the end of 2022, while bank deposits increased by VND136,000 billion in February.

Additional deposits were recorded at VND101,000 billion in March and VND52,000 billion in April. The deposit channel has recently become less attractive to individuals due to lower interest rates.

After reaching its peak in January, interest rates have continuously been revised down, ranging from 1.5% to 4% per annum. For fixed-term deposits, interest rates have fluctuated around 4% to 8% per annum.

Deposits from organizations and businesses saw an increase of VND94,000 billion in May, reaching a total of VND5,748 trillion.

However, compared to the end of 2022, deposits from organizations and businesses decreased by 3.45%, with withdrawals amounting to VND205,000 billion.

As of the end of May, commercial banks provided an additional VND29,000 trillion in loans to the economy, bringing the total outstanding loans to VND12,314 trillion, up 3.27% from the end of 2022.

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