A customer at a bank in Hanoi. (Photo: VNA) Focusing on increasing CASA – or the proportion of demand depositsout of total deposits – has been one of the top targets of many banks in recentyears as it is a cheap capital source that helps banks have low input capitalcosts. Currently, demand deposits have very low interest rates of only 0.1% peryear.
According to banks’ Q2 2022 financial statements, VietnamTechnological and Commercial Joint Stock Bank (Techcombank), was still theleader in terms of CASA ratio in Q2 2022. Specifically, with 152.7 trillion VNDof cheap capital, Techcombank’s CASA ratio ranked first with 47.5%. This is thebank’s achievement as it has been one of the pioneers in providing ‘zero fee’online transactions. Techcombank has also heavily invested in technology toattract new customers and promote electronic transactions.
However, with 50.4% CASA ratio recorded in Q1 2022, Techcombank’sCASA declined by the end of Q2 2022.
During a recent meeting with investors, Techcombank’s leadersattributed the CASA’s decline to the transfer of customers to some otherproducts such as real estate and securities investments.
However, the leaders said, Techcombank was implementing plans toboost CASA ratio in the coming months and they expected the bank to soon regaingrowth in CASA.
VPBank was the bank that recorded the second largest decrease inCASA ratio after Techcombank, with a decline of 2.5% compared to the end ofMarch 2022. Despite seeing an impressive growth of 22% in deposits in Q2 2022,VPBank’s demand deposits dropped by nearly 5%, causing its CASA ratio to fallto 19%.
Besides Techcombank and VPBank, the CASA of Maritime CommercialJoint Stock Bank (MSB) in Q2 2022 also fell to 36.5% from the 38.1% recorded inthe previous quarter.
Similarly, the CASA ratio of many other banks, such as Tien PhongCommercial Joint Stock Bank (TPBank), An Binh Commercial Joint Stock Bank(ABBank) and Vietnam International Commercial Joint Stock Bank (VIB), in Q22022 also slightly declined compared to Q1 2022.
However, some small-sized banks, which are in the group of bankswith low CASA ratios in the banking system, reported a slight increase in theCASA ratio in Q2 2022.
At Bac A Commercial Joint Stock Bank (BacABank), for example, thesmall-sized bank’s deposits in the first six months of 2022 increased by 5.2%to 90.02 trillion VND. Notably, the bank’s CASA surged by 2.3 times to 3.27trillion VND. As a result, BacABank’s CASA improved from 3.3% as of late 2021 to6% after the first half of 2022.
Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank) also sawan impressive surge in CASA ratio in Q2 2022. The bank’s demand deposits grewby nearly 37%, helping its CASA ratio to increase to 5.6%.
In a recent report on the banking industry outlook in the secondhalf of 2022, Vietcombank Securities Company (VCBS)’s experts said the sharpincrease in savings interest rates has started to adversely affect banks’capital costs. However, the costs will remain lower than the pre-pandemic levelthanks to the high CASA ratio.
The entire banking system recorded a high CASA ratio of 22.1% inQ1 2022 when State-owned banks joined the race to attract individual customersand increase CASA market share through free-of-charge online transactions andthe development of digital products.
VCBS forecast in the coming quarters, the CASA ratio may be underdownward pressure due to the less favourable asset investment market and thefocus of idle capital on investments in production and business activities.
Banks, which often see a rapid increase in the number of customerssuch as Techcombank, Military Commercial Joint Stock Bank (MB), MSB and TPBank,will have more abundant CASA sources to help them reduce capital costs in thelong term, VCBS’s experts said.
Banking expert Nguyen Tri Hieu told VietnamNews that the competition among banks to lure demand deposits, orincrease the CASA ratio, is becoming fiercer as the cheap capital source helpsbanks increase their net interest income (NIM) ratio.
According to Hieu, CASA is characterised by instability ascustomers can withdraw their demand deposits at any time. Therefore, banks,especially small-sized ones, must focus on improving their services to luredemand depositors so as to increase their CASA rate.
“If a bank does not focus on developing digital services to enableit to connect with more ecosystems to serve the diverse needs of customers,they will either automatically choose another bank with better services, orwithdraw their money to invest in other channels. At that time, the bank’s CASAwill decline,” Hieu said./.
VNA
