Bank deposits grow despite lower interest rates

By Quynh Trang October 30, 2023 | 08:35 pm PT

An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy

Individual bank deposits grew 9.7% in the first 8 months of this year despite decreased interest rates, as the unattractive stock and real estate markets left few investment options.

People deposited VND6,430 trillion (US$267.9 billion) in banks between January and August, according to data from the central bank.

The central lender reported that individuals bank deposits totaled VND43.7 trillion in August even though a dozen banks paying the highest interest were still only offering around 7% or more for deposits under VND1 billion.

Meanwhile, interest rates at the country’s 20 other remaining banks were only up to about 6%-7% per year, usually for one-year terms.

Nguyen Quoc Hung, chairman of the Vietnam Banks Association (VNBA) said at a meeting with bank representatives last December that the popular interest rate at the time was at 9-10% annually for a 12-month term, with some banks offering up to 11.5%.

Organizations such as companies and agencies deposited VND103 trillion in the banking system in August, bringing total deposits in the first eight months to VND6,000 trillion, up by 1% against the end of last year.

In previous years, low interest rates during the Covid-19 period had channeled cash flows into other investment avenues such as stocks and real estate.

However, bankers do not expect such a trend this time as the stock and real estate markets are now gloomy.