Stable inflation rates have helped attract depositors. However, the recent incidents of depositors losing money at some banks, plus the rise of many attractive investment channels, will divert cash flow from banks.
A report found that the total capital mobilised by the banking system grew by 16.1 percent in 2015, and by 19 percent in 2016, but decreased to 15 percent in 2017.
Banks found it easy to mobilise capital from institutions and individuals thanks to stable inflation in the last few years.
In addition, with zero percent interest rate policy applied to dollar deposits, and banks’ decisions to stop receiving gold deposits, people converted their gold and dollar assets into dong and deposited dong at banks.
However, analysts warned that the favourable conditions that helped drive the capital flow into banks will not exist in the time to come.
There are signs of inflation bouncing back. The CPI increased by 1.24 percent after the first two months of the year, while the targeted inflation rate is 4 percent for the entire year of 2018.
Higher inflation will make deposits less attractive, because the real profits of depositors will decrease.
The current 12-month term deposit interest rate is hovering around 7.2 percent. If the inflation rate is 4 percent this year as expected, the real interest rate would be 3 percent, a relatively low profit compared with other investment channels.
Securities investment is one channel. In 2017, with the VN Index increasing by 48 percent and HNX Index by 46 percent, investors expected high profits of up to 200-300 percent if they chose the right shares to invest in.
The stock upswing continued in the first months of 2018, with the VN Index having surpassed an 11-year high.
Though signs of corrections have been seen in the last few trading sessions, the medium- and long-term prospects are still good amid expectations about the market upgrading to an emerging market status
The real estate market could also be a destination for idle capital. Large urban areas, which have seen price escalate, and areas chosen to develop special economic zones have attracted big money.
An analyst said some bankers now feel pressure as large amounts of money have been withdrawn by depositors who plan to invest in real estate in the face of predicted real estate price escalations.
Meanwhile, the movement of converting dollar into gold and dong in the last two years is reaching a saturation point.
The gold price may bounce back amid risks about a trade war. The US dollar prime interest rate is anticipated, which will cause the greenback to appreciate. Thus, investors may decide to keep dollars again.
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