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Sunday, June 16, 2024

Behind the CASA recovery

By Le Hoai An (*) - Dong Hoang Huong Lien

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The current and savings account (CASA) ratio at commercial banks has made a striking rebound after having declined for four consecutive quarters, as reported in their second-quarter 2023 financial statements. This resurgence in CASA ratio holds the potential to finely tune capital costs within banks. However, this recovery is confronted with a dual challenge: persisting uncertainties in production and business activities juxtaposed with a newly energized stock market. In recent years, the CASA ratio has emerged as a pivotal metric within the commercial banking system. This ratio profoundly affects capital costs and bolsters the net interest margin (NIM) for banks. The improved CASA ratio is largely a testament to the digital solutions that the banking sector has embraced over time. Nevertheless, there exist certain lenders whose ascending CASA ratios are primarily attributed to their endeavors in extending credit to associated business ecosystems. Deciphering the CASA rebound The CASA ratio within the banking system has traversed a series of fluctuations in recent times. Witnessing a rapid surge from 2021 to early 2022, it encountered a steep descent over the past four quarters, particularly in the first quarter of 2023, before displaying signs of improvement in the second quarter. Aggregated data illuminates […]
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