Illustrative image (Photo: VNA) Hanoi (VNS/VNA) - Many banks no longer benefit from demand deposits as the low-cost capitalsource has declined sharply due to the impacts of the COVID-19 pandemic.
For banks, attracting a high proportion of demand deposits is important, becauseit creates a cheap source of capital. Normally, the interest rates of demanddeposits are much lower than term deposits, being only around 0.2 percent perannum.
At Kien Long CommercialJoint Stock Bank (Kienlongbank), though the bank’s customer deposits still grewby up to 10.4 percent in the first quarter of this year, the amount of demanddeposits significantly dropped by nearly 31 percent to just more than 1trillion VND (42.9million USD), Bizlive.vn reported.
The bank’s current account savings account (CASA) fell sharply from 4.62 percentat the beginning of the year to 2.88 percent by the end of June, being in thegroup of banks with the lowest CASA among the surveyed banks.
Similarly, the demand deposits at Bac A Commercial Joint Stock Bank (BacABank) decreased by 27.4 percent in the firsttwo quarters of the year, causing its CASA to plummet to a very low level ofjust 1.21 percent.
Some other banks also recorded sharp fall of demand deposits, including SaigonHanoi Commercial Joint Stock Bank (SHB, down by 21 percent), Export ImportCommercial Joint Stock Bank (Eximbank, down by 18.4 percent) and Southeast AsiaCommercial Joint Stock Bank (SeABank, down by 14.8 percent).
In particular, SHB is one of the banks that recorded a sharp decline in CASA inthe period, down from 9.38 percent at the beginning of the year to only 6.95 percentby the end of June.
At Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank), the CASA alsodecreased 2.28 percent to 12.27 percent, while SeABank saw a decline of 3.71 percentto 8.73 percent.
Even the three banks which have strong CASA including Military Commercial JointStock Bank (MBB), Vietnam Technological and Commercial Joint Stock Bank(Techcombank) and Commercial Joint Stock Bank for Foreign Trade of Vietnam(Vietcombank) also recorded a decline in CASA.
Despite leading the surveyed group with CASA of 35.61 percent, MBB’sexperienced a slight CASA decline from 38.38 percent at the beginning of theyear. Similarly, Vietcombank and Techcombank respectively recorded CASA fallsof 1.98 percent and 0.05 percent.
The decline in banks’ demand deposits has been recorded as Vietnam’s economyhas been negatively affected by the COVID-19 pandemic, including a socialdistancing period.
Statistics of the State Bank of Vietnam also showed the amount of deposits onpayment accounts of the banking system experienced a sharp decline.
According to experts, the high CASA ratio will create a premise for the bank toimprove its net interest margin (NIM) while keeping the lending rates atcompetitive levels in the market.
That is also the reason why in the past few years, the Vietnamese commercialbanking system has witnessed an increasingly fierce race to increase CASA, withbanks introducing many policies to attract demand depositors, such as exemptionof transaction, money transfer and withdrawal fees./.
For banks, attracting a high proportion of demand deposits is important, becauseit creates a cheap source of capital. Normally, the interest rates of demanddeposits are much lower than term deposits, being only around 0.2 percent perannum.
At Kien Long CommercialJoint Stock Bank (Kienlongbank), though the bank’s customer deposits still grewby up to 10.4 percent in the first quarter of this year, the amount of demanddeposits significantly dropped by nearly 31 percent to just more than 1trillion VND (42.9million USD), Bizlive.vn reported.
The bank’s current account savings account (CASA) fell sharply from 4.62 percentat the beginning of the year to 2.88 percent by the end of June, being in thegroup of banks with the lowest CASA among the surveyed banks.
Similarly, the demand deposits at Bac A Commercial Joint Stock Bank (BacABank) decreased by 27.4 percent in the firsttwo quarters of the year, causing its CASA to plummet to a very low level ofjust 1.21 percent.
Some other banks also recorded sharp fall of demand deposits, including SaigonHanoi Commercial Joint Stock Bank (SHB, down by 21 percent), Export ImportCommercial Joint Stock Bank (Eximbank, down by 18.4 percent) and Southeast AsiaCommercial Joint Stock Bank (SeABank, down by 14.8 percent).
In particular, SHB is one of the banks that recorded a sharp decline in CASA inthe period, down from 9.38 percent at the beginning of the year to only 6.95 percentby the end of June.
At Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank), the CASA alsodecreased 2.28 percent to 12.27 percent, while SeABank saw a decline of 3.71 percentto 8.73 percent.
Even the three banks which have strong CASA including Military Commercial JointStock Bank (MBB), Vietnam Technological and Commercial Joint Stock Bank(Techcombank) and Commercial Joint Stock Bank for Foreign Trade of Vietnam(Vietcombank) also recorded a decline in CASA.
Despite leading the surveyed group with CASA of 35.61 percent, MBB’sexperienced a slight CASA decline from 38.38 percent at the beginning of theyear. Similarly, Vietcombank and Techcombank respectively recorded CASA fallsof 1.98 percent and 0.05 percent.
The decline in banks’ demand deposits has been recorded as Vietnam’s economyhas been negatively affected by the COVID-19 pandemic, including a socialdistancing period.
Statistics of the State Bank of Vietnam also showed the amount of deposits onpayment accounts of the banking system experienced a sharp decline.
According to experts, the high CASA ratio will create a premise for the bank toimprove its net interest margin (NIM) while keeping the lending rates atcompetitive levels in the market.
That is also the reason why in the past few years, the Vietnamese commercialbanking system has witnessed an increasingly fierce race to increase CASA, withbanks introducing many policies to attract demand depositors, such as exemptionof transaction, money transfer and withdrawal fees./.
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