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Deposits soar in Q1 despite interest rate cuts

The Saigon Times

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HCMC – Individuals’ deposits at commercial banks in the first quarter of 2023 soared by around VND415 trillion, the highest level in over 10 years, despite lower interest rates, showed data from the State Bank of Vietnam (SBV).

By the end of March, individuals’ deposits totaled VND6,280 trillion, a 7% increase compared to the beginning of the year.

In the first three months of the year, individuals deposited an additional VND415 trillion into the banking system, which is significantly higher than the average of VND150 trillion during the first quarter over the past several years.

Conversely, deposits from organizations and businesses decreased by nearly 4.9% compared to the beginning of the year, totaling VND5,660 trillion. This decline can be attributed to cash flow shortages faced by real estate businesses and a lack of new orders for manufacturing and trading enterprises.

As a result of the opposite trends between individual and institutional depositors, the overall money inflow into the banking system in the first quarter grew by a mere 1% versus the beginning of the year, equivalent to nearly VND150 trillion.

Due to interest rate reductions since April, the deposit channel has lately appeared less attractive to individuals. By the end of May, most banks had lowered their interest rates to below 8.5% per year, following the SBV’s decision to further decrease key interest rates in its easing cycle.

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