The general Statistical Office said that in the first quarter of the year, capital mobilisation growth was estimated at 1.72 percent compared to the end of last year while the credit growth was estimated at 1.9 percent. According to the State Bank of Vietnam (SBV), on 25th March 2016, credit grew by 2.28 percent.
Capital mobilisation growth has not been disclosed by management. Thus, credit growth is still higher than capital mobilisation growth and the trend starting from 2017 is still maintained.
To compete, banks are launching more new measures to raise capital. UOB Vietnam is offering a programme with the name of “preferred account”, where customers having six-month deposits (interest rate of 6 percent per year), and 12-month deposit (interest rate of 7 percent per year) can borrow up to 80 percent of the saving amount with loan interest equal to the deposit interest rate, the loan tenor equal to the saving tenor, maximum 11 months, interest is paid monthly. In addition, customers are free of remittance fee for transferring money to other banks.
So far, domestic banks usually offer loan to depositors based on their savings when they need it, however, interest rate is not equal to the deposit rate, but plus a margin of 0.5-2 percent per year depending on location, loan value and tenor. The borrower of this type of loan must pay interest monthly.
UOB Vietnam, with the above offer, helped depositors borrow at rates equal saving rates without adding any margin. This flexibility is significant and attracts deposits that depositors are unsure about their spending needs or have short-term spending needs that repeat over a long period of time.
Some domestic banks have other offers. For example, customers make deposit for 18 months with interest rate of 8 percent per year, but if the real tenor has passed 180 days or more continuously, customers can early settle the deposits but still enjoy the same interest rate. This offer is like raising capital for six months at an interest rate of 8 percent per year.
Promotional gifts for depositors have now become popular. Free gifts, vouchers, discount vouchers when using the services of affiliated partners, etc., any bank offer those gifts, so they are no longer attractive to depositors.
Instead, banks reduce service fees for customers such as lower overseas remittance fee (for studying abroad, medical treatment, migration, etc.), free remittances between banks, pre-repayment of loans without penalties, lower fee for card using abroad.
In order to maintain customers’ engagement, banks limit lending secured by savings deposit at other banks. Some banks only accept savings books of reputable banks such as Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and Asia Commercial Joint Stock Bank (ACB), while the deposits at small joint stock banks are “denied”, like the head of credit department of a big bank in HCM City said. Some banks even say “no” absolutely to saving books of any other bank as security for their loans.
According to the general director of a bank, meeting the target of using 40 percent of short-term capital for medium and long-term loans is more urgent because from the beginning of April, SBV started to rank the credit institutions under Circular 52/2018.
The ranking is based on extremely specific criteria, details regarding capital, asset quality, governance, business performance and especially liquidity and sensitivity to market risks. The ranking results are not publicised but will be announced to each bank, which is like an alarm for the banks at low rankings.
Punishing measures may not stop at the current level, but are likely to be more drastic such as not allowing credit growth in absolute numbersoften only applied to banks placed in special control status.
By the end of the first quarter, SBV just allocated credit targets for 2019 to banks. Some banks in the report at the meeting of shareholders this year, set a high credit target, from 17-18 percent to 35 percent, however, explained to shareholders that target was temporarily set, and will be adjusted after receiving SBV’s allocation. High levels of credit indicators show banks’ ambitions for profit growth and are evidence of increased competition in capital mobilisation.
Saving deposit is still the preferred choice among investment channels. However, according to banks, customers with large deposits amounted to billion dong or more are shifting to real estate investment due to the mid-and high-end real estate segment’s prices are evaluated to be at the level of higher growth than bank interest rates. In addition, depositors spend more on daily life, so idle deposits with moderate to low amount have no longer maintained the same growth rate as in previous years.
