Statistics of BizLIVE at 19 banks that have announced consolidated financial statements in the second quarter (Q2) of 2020 showed that the demand deposits tended to decline in the first six months of the year (H1).
Kien Long Commercial Joint Stock Bank (Kienlongbank) is an example. Although the bank’s customer deposits still grew by up to 10.4 percent in H1, the amount of demand deposits significantly dropped by nearly 31 percent to just over one trillion dong.
The bank’s Current Account Savings Account (CASA) accordingly fell sharply from 4.62 percent at the beginning of the year to 2.88 percent by the end of June 2020, being in the group 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 first two quarters of the year, causing its CASA to plummet to a very low level of just 1.21%.
Some other banks also recorded sharp fall of demand deposits, including Saigon Hanoi Commercial Joint Stock Bank (SHB, down by 21%), Export Import Commercial Joint Stock Bank (Eximbank, down by 18.4%), Southeast Asia Commercial Joint Stock Bank (SeABank, down by 14.8%), etc.
According to the survey, up to 17 out of 19 banks experienced CASA reduction in H1.
In particular, SHB is one of the banks that recorded sharp decline in CASA in the period (down from 9.38 percent at the beginning of the year to only 6.95%).
At Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank), the CASA also decreased by 2.28 percentage points to 12.27%, while SeABank saw a decline of 3.71 percentage points, reaching 8.73%.
Even the three banks which have strong CASA including Military Commercial Joint Stock 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%, MBB’s experienced a slight CASA decline from 38.38 percent at the beginning of the year. Similarly, Vietcombank and Techcombank respectively recorded CASA falls of 1.98 percentage points and 0.05 percentage point.
For banks, attracting a high proportion of demand deposits is important, because it creates a cheap source of capital.
Normally, the interest rates of demand deposits are much lower than term deposits’, being only around 0.2 percent per annum.
The high CASA ratio will create a premise for the bank to improve its net interest margin (NIM) while keeping the lending rates at competitive levels in the market.
That is also the reason why in the past few years, the Vietnamese commercial banking system has witnessed an increasingly fierce race to increase CASA, as members continuously introduced policies to exempt transaction fees, money transfer and withdrawal fees, etc.
In addition, banks have also boosted investment in information technology systems, particularly developing transaction banking systems, increasing convenient products and policies, establishing and connecting expanded ecosystems to attract large customer files.
However, as mentioned in the above, the reported data pointed out a not very optimistic fact in H1. It should be noted that, the decline of banks’ demand deposits is recorded in the context when the Vietnam’s economy has been negatively affected by the Covid-19 epidemic for more than half a year, including a social distancing period.
As BizLIVE mentioned at that time, statistics of the State Bank of Vietnam (SBV) showed that the amount of deposits of people on payment accounts across the system experienced a sharp decline both total value and average level.
In a different development, in this statistic period, the stock market continuously saw new high recorded in the number of new accounts opened by individual investors. At the same time, the continuous escalation of gold prices during the period is also a factor that has attracted the idle capital previously deposited in commercial banks.
