Increasing pressure from the gap between deposit interest rates and...

Deposits grow slower than credit as interest rates fall 0.4%

According to information from the General Statistics Office under the Ministry of Finance, as of March 25, 2025, total capital mobilization from credit institutions increased by 1.36%, while credit supply to the economy increased by 2.49%. This led to a gap between mobilization and lending in the banking system of up to VND 1.1 million billion.

The State Bank of Vietnam (SBV) has just announced updated data on customer deposits at credit institutions (CIs) at the end of December 2024. Accordingly, the total amount of capital mobilized from residents and economic organizations reached 14.73 million billion VND, of which in December alone, banks mobilized an additional 463,000 billion VND. Specifically, deposits from residents reached 7.065 million billion VND (an increase of 65,000 billion VND in December), while deposits from economic organizations reached 7.66 million billion VND (an increase of nearly 400,000 billion VND).

Although the amount of deposits in the banking system is close to VND15,000 trillion, the growth rate is still slower than credit growth. By the end of 2024, total outstanding credit had reached VND15.7 trillion, nearly VND1,000 trillion higher than total mobilization. Entering the first quarter of 2025, this trend continued to increase when credit growth was twice as fast as capital mobilization, causing the gap to exceed VND1,000 trillion.

Notably, deposits still peaked in the context of a downward trend in interest rates since mid-February, while other investment channels such as real estate, gold, stocks, etc. are gradually improving. Cash flow therefore tends to shift more strongly to these investment areas, making it difficult for deposit growth to keep up with credit growth.

Since the beginning of April, three more banks – OCB, MB and VPBank – have adjusted their deposit interest rates down. Thus, following the direction of the Prime Minister and the State Bank of Vietnam since the end of February 2025, up to now, about 28 commercial banks have reduced their deposit interest rates, of which some banks such as Eximbank and Kienlongbank have adjusted many times (7 times and 4 times, respectively). The highest reduction recorded is up to more than 1%/year.

According to estimates from credit institutions, in the first quarter of 2025, the average VND deposit interest rate for all terms decreased slightly from 0.03 to 0.05 percentage points; lending interest rates also decreased from 0.08 to 0.1 percentage points compared to the previous quarter. This development is contrary to the previous forecast of a slight increase in both interest rates in the previous survey period.

To make up for the shortfall, banks must use their own capital and refinancing from the State Bank.

Compensate with both equity and re-lending capital from the State Bank

Recent reality shows that rapid credit growth has led to an increase in the banking system's demand for capital mobilization. In order to maintain the ability to attract deposits, banks are forced to keep the mobilization interest rate level at a relatively stable level. According to forecasts from credit institutions (CIs), in the second quarter of 2025, the average mobilization interest rate level of the whole system will basically be kept stable, with an insignificant increase - about 0.02 percentage points for terms over 6 months and 0.17 percentage points for terms of 6 months or less in the whole year of 2025.

However, banks are still making efforts to reduce lending rates to support production and business activities. It is expected that the average lending interest rate of the whole system will continue to decrease slightly from 0.03 to 0.08 percentage points in the second quarter and the whole year of 2025.

For the whole year, credit institutions expect total capital mobilization of the entire system to grow by about 13.10% - 3.3 percentage points lower than the expected credit growth of 16.4%. In particular, short-term credit and mobilization are forecast to grow more strongly than long-term ones.

At a workshop held at the end of February 2025, Deputy Governor of the State Bank Dao Minh Tu also frankly acknowledged that the banking sector is currently lending more capital to the economy than the mobilized capital. Specifically, for every VND9 mobilized, the system lends up to VND10, the difference must be compensated by equity capital and re-lending capital from the State Bank.

This puts great pressure on the banking industry in 2025, when it is assigned the responsibility of supporting the economic growth target of 8% or more. While the national GDP is currently around VND12 million billion, outstanding credit is approximately VND16 million billion - equivalent to 135% of GDP. Mr. Tu commented: "From a macro perspective, this is a worrying problem but it is imperative to make efforts to implement it, in the spirit of political determination of the Party, the Government and all levels and sectors."

In the context of capital mobilization growth not keeping up with credit, the State Bank will proactively use management tools to support liquidity for the system, ensuring the ability to supply credit capital to serve growth targets.

At the same time, this year's management orientation continues to emphasize credit priority in essential production and business sectors, with a focus on strongly promoting domestic consumer credit.

In addition, the State Bank will also maintain a stable policy of operating interest rates, thereby creating conditions for commercial banks to have room to continue lowering lending rates, accompanying businesses and the economy.

Source: https://baodaknong.vn/gia-tang-ap-luc-tu-khoang-cach-giua-lai-suat-huy-dong-va-cho-vay-248922.html