Bank lending tops deposits for 1st time in a decade

By Quynh Trang   January 4, 2023 | 08:12 pm PT
Bank lending tops deposits for 1st time in a decade
An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy
Bank loans, in 2022, exceeded deposits for the first time in 10 years, causing a liquidity crunch and a deposit interest rate race.

The banking system pumped more than VND1,500 trillion ($6.38 billion) into the economy in 2022, also the largest ever credit amount in a year, Nguyen Thi Hong, governor of the State Bank of Vietnam, said at an online meeting on Dec. 3.

It represented an increase of 14.5% from the previous year-end.

Banks stepped up lending right from the beginning of the year, causing them to quickly run out of credit quotas granted by the central bank.

Meanwhile, they had difficulty in mobilizing deposits. As of Dec. 21 deposits increased by only 5.99% for the year to VND11.6 quadrillion, the lowest growth rate in the last decade.

The last time deposit mobilization was lower than credit was in 2012.

According to Yuanta Securities Company, many banks reached the loan-to-deposit ratio ceiling and so had to rely on the interbank market and foreign financial institutions for liquidity.

Mobilization improved in the last two months of last year when deposit interest rates were high, but experts foresee the difficulties to continue this year.

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