Bank deposits decline for first time in over two years

Monday, May 06, 2024 08:19

A savings passbook issued by private lender PVcomBank. — VNS Photo Bồ Xuân Hiệp

Banks’ deposits decreased for the first time in two years as of the end of March, according to data from the central bank.

They were down 0.76 per cent compared to the beginning of the year after increasing by nearly 1.2 per cent during the same period last year, stated the General Statistics Office.

Retailers’ deposits totaled VNĐ6.5 quadrillion (US$256.5 billion) as of the end of January, down nearly VNĐ35 trillion or 0.5 per cent compared to the beginning of the year. Since the end of 2021, deposits had been steadily increasing, averaging over VNĐ50 trillion each month.

Businesses have also reduced their deposits in banks, amounting to VNĐ6.67 quadrillion at the end of January, down VNĐ165 trillion or over 2.4 per cent over the beginning of the year.

Experts attributed the shift of funds away from banks to prolonged low interest rates.

With alternative channels such as gold offering much better returns, investors are choosing to allocate their funds elsewhere, experts noted.

Several lenders have begun increasing deposit rates to attract and retain depositors, ensuring sufficient liquidity despite sluggish credit growth.

For example, private lender PVcomBank, which is 52 per cent State-owned by PetroVietnam, has introduced a certificate of deposit product offering an interest rate of 8 per cent per year for a long term of 85 months.

The move is in contrast with the average interest rate of around 5 per cent per year for terms of over 12 months. For short-term deposits of under 12 months term, the rates are between 2-4 per cent per year, the lowest level in many years. — VNS

Comments (0)