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As of the end of August 2023, the State Bank of Vietnam (SBV) has recently released data indicating that the deposit balance in the banking system surpassed VND6.43 quadrillion, up nearly 9 percent compared to the end of 2022, equivalent to an absolute increase of VND567.6 trillion.
In September 2023, people deposited an additional VND15.9 trillion to the banking system. Accordingly, banks attracted a total of VND6.45 quadrillion. The rise in personal deposits for September 2023 was slightly below the pre-pandemic levels but exceeded the figures from the same period three years ago. Compared to the beginning of 2023, personal deposits saw a 9.95 percent increase, marking the highest growth rate since 2018.
Besides attracting idle funds from the public, there has been a substantial surge in deposits by economic organizations in banks. Specifically, in September 2023, economic organizations deposited VND217 trillion, reaching a total of VND6.23 quadrillion in the first nine months, up 4.65 percent compared to the beginning of the year. Thus, the bank deposits of the institutional sector in September 2023 surpassed those of the general population.
In total, deposits from both the general population and institutional sector into the banking system reached VND12.68 quadrillion by the end of the third quarter of 2023, indicating an increase of nearly 7.3 percent compared to the beginning of the year.
Addressing the persistence of funds flowing into the savings channel despite a significant decline in deposit interest rates, experts highlight that individuals favor the safety of savings accounts, even though their returns may not match those of other investment avenues. Especially in the current scenario where the real estate market is slowing down, and both the gold and stock markets are experiencing substantial fluctuations, introducing heightened risks that prompt investors to continue seeking refuge in savings deposits.
Clarifying the recent substantial inflow of funds into banks by organizations, the leader of a commercial bank in Ho Chi Minh City explained that typically, towards the end of the year, money tends to leave banks as businesses and individuals withdraw funds to prepare for the peak season of production and business, as well as for shopping and spending. However, in the current economic context, where absorption is still weak, excess credit in banks is not only not being directed to the market but is also attracting a significant amount of idle money, including from the institutional sector.
"Given the uncertain prospects of the upcoming economy, the business environment still carries considerable risks. As a result, most enterprises are scaling back their operations and adopting a defensive approach. They are not only avoiding bank loans but also showing a tendency to deposit idle funds in banks to earn interest while awaiting new opportunities for business expansion," the source explained.
With the highest savings interest rate in VND reaching over 10 percent per annum in October 2022, the current rates for VND savings under six months at most banks have fallen to below 5 percent per annum, ranging from 2.6 percent to 4.7 percent per annum. Meanwhile, term deposit rates for 12 months are around 5-6 percent per annum. Consequently, in comparison to the same period in 2022, VND savings interest rates have experienced a decline of 3-5 percent per annum.
