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Wednesday, January 27, 2021

Banks see more depositors despite lower rates

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HCMC – Local banks have significantly reduced the deposit rate following policy rate cuts by the State Bank of Vietnam but depositors have still sought the channel as a safe haven amid the economic turbulences caused by the Covid-19 pandemic, stated a news report on motthegioi.vn.

Since early this year, the central bank has cut its policy rates twice with total reductions from 1 to 1.5 percentage points to boost liquidity and help local credit institutions access the low-cost capital source. Besides this, it has cut the deposit rate ceiling by 0.6 to 0.75 percentage points for tenors under six months and the short-term lending rate ceiling by one percentage point for priority sectors.

At present, the rate of mobilization at banks hovers at 0.1% to 0.2% per annum for call deposits and tenors less than one month, 4% to 4.25% for deposits of one to under six months, 4.9% to 6.6% for six to under 12 months and 6.5% to 7.4% for over 12 months. Meanwhile, lending rates in dong are from 6% to 9% per annum for short tenors and from 9% to 11% for medium to long tenors.

According to statistics of the SSI Securities Corporation, in the middle of this month, banks cut rates of mobilization further by 0.2 to 0.4 percentage points, taking the total reductions since early this year to 0.5 to 1.1 percentage points.

Banks are still seeing a rise in mobilization. According to the General Statistics Office, as of June 19, the total money supply had increased 4.59% compared with the end of 2019 (versus a 6.05% rise over the same period last year), while mobilization had gained 4.35% compared with last year’s figure at 6.09%.

During the period, local banks reported a credit growth rate at 2.45%, marking the lowest year-on-year rise in the 2016-2020 period but still impressive amid the complicated developments of the Covid-19 pandemic.

Ending May 20, banks had reported a total mobilization of some VND162.7 trillion, equivalent to over VND1.1 trillion per day. Meanwhile, credit reached some VND108.2 trillion or VND773 billion a day, resulting in a capital surplus in some localities.

Many lenders are worried about the abundant capital and low credit growth. Speaking at a press conference reviewing banking activities in the first six months of this year, Deputy Governor of the central bank Nguyen Thi Hong said local banks are expecting qualified borrowers to improve their credit growth and income.

Some experts have advised banks to slash rates of mobilization and lending to support citizens and businesses, given the low rate of inflation at under 4%.

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