Personal bank deposits has decreased consecutively for the past two months as depositors have withdrawn their savings to pour into more attractive investment channels amid declining deposit interest rates.

According to data from the State Bank of Vietnam (SBV), personal bank deposits totalled nearly VND5.29 quadrillion (US$230 billion) by late September, down roughly VND1.5 trillion against late August.

In July, monthly bank deposits also fell against previous months, the central bank stated, noting deposits in August decreased by some VND1 trillion against July.

From early January to late September, personal deposits hit VND150 trillion, a year-on-year decline of some 50 per cent.

Lower savings interest rates and more attractive stock market and cryptocurrency channels were blamed for falling deposits.

A recent report on the capital market by Saigon Securities Incorporation (SSI)’s Research Division showed the interbank interest rates declined thanks to abundant liquidity. The liquidity of the banking system last week was supported by a large volume of Vietnamese dong that the central bank used to purchase matured foreign currency.

Particularly in the first three weeks of November, the amount of dong injected into the market via the SBV’s foreign currency purchase reached up to VND60 trillion, which helped lower the interbank interest rates. The overnight rate closed the week at 0.65 per cent per year, down 4 basis points, while the one-week rate declined 3 basis points to 0.75 per cent per year.

Currently, four State-owned banks Vietcombank, VietinBank, Agribank and BIDV and some large banks such as Techcombank and Military Bank are listing the lowest interest rates in the banking system.

The highest savings interest rate for 12-month deposits at Vietcombank, Agribank and BIDV is 5.5 per cent per year while VietinBank is capping the rate at 5.6 per cent per year.

Previously, banks often raced to increase savings interest rates and launched promotional programmes to attract depositors in the last months of a year to meet rising capital demand in the peak business season ahead of the country’s biggest holiday Tet (Lunar New Year). However, due to the adverse impacts of the COVID-19 pandemic, the savings interest rates have been dropping and remained stable since last year.

SSI’s Research Division forecast savings and lending interest rates would continually remain at low levels in the last months of this year. Specifically, savings rates would fluctuate at 3-4 per cent per year for less than six month deposits; 3.7-5 per cent per year for six to 12 month deposits; and 4.2-6.5 per cent per year for over 12 month deposits.

Meanwhile, lending interest rates would be 5-7 per cent per year for short-term loans and 9-11 per cent per year for loans of over 12 months, the division predicted. — VNS