Low demand, SJC gold bars still increase regardless
Despite the plunge in world gold prices on November 10, SJC gold bars still increased, adding 200,000 - 300,000 VND per tael. Eximbank bought at 69.5 million VND and sold at 70.2 million VND. Meanwhile, Saigon Jewelry Company - SJC bought at 69.3 million VND and sold at 70.3 million VND... Other gold trading units also bought and sold SJC gold bars at high prices. In the past 4 days, the price of SJC gold bars fluctuated quite strongly with an increase - decrease range of up to 2 million VND/tael. Those who bought gold 3 days ago at 68 million VND/tael now have a profit of 1.5 million VND/tael if looking at the increase.
SJC gold bar price remains high
However, buying gold contains many risks and very often, even if buying low and selling high, gold buyers still make low profits because the selling price of SJC gold bars is higher than the buying price, maintaining at 1 million VND/tael. Compared to world gold, SJC gold bars are 12 million VND/tael higher. On the contrary, gold rings shorten the gap when they are only 1.35 million VND/tael higher than world gold. SJC Company buys gold rings at 58.6 million VND, and sells them at 59.55 - 59.65 million VND.
The domestic gold price on November 10 was in contrast to the downward trend of the international gold price, losing 5 USD/ounce, down to 1,955 USD/ounce. The gold price lost momentum when the USD on the international market strengthened, the USD-Index increased to 105.9 points. Information that the US Federal Reserve (Fed) is likely to raise interest rates to bring inflation to the target of 2% caused the USD to return, pulling gold down. However, some recent reports from international organizations said that gold is undervalued by 20%. The prospect of gold prices increasing after surpassing the price of 2,000 USD/ounce when the Fed cuts interest rates next year.
It is worth noting that despite being at a high level, domestic gold demand has not increased. According to a report by the World Gold Council (WGC), gold consumption demand in Vietnam decreased by 1% year-on-year to 11.9 tons in the third quarter of 2023, while in the third quarter of 2022, the figure was 12 tons. This decline was mainly due to a 14% year-on-year decrease in domestic jewelry demand. However, the growth in demand for gold bars and coins offset this, increasing by 4% year-on-year, from 8.5 tons in the second quarter of 2022 to 8.8 tons in the third quarter of 2023. Jewelry demand in Vietnam in the third quarter was at its lowest level since 2021. High inflation and slower-than-expected economic growth have affected consumer purchasing power. However, the devaluation of the VND has prompted investors to take advantage of the August price adjustment as a safe starting point to strategically invest in gold bars and coins as an asset accumulation channel.
Bottom line savings interest rate
Meanwhile, money is still flowing into banks (NH) even though savings interest rates are still testing the bottom. The big bank Vietcombank has just reduced the interest rate on savings in VND by 0.1 - 0.2%/year for all terms, this is the second reduction in the past 10 days by this bank. Accordingly, the interest rate on savings for 1 - 2 months is 2.6%/year, 3 months is 2.9%/year, 6 - 9 months is 3.9%/year, 12 months and above is 5%/year. 3 banks with state capital such as BIDV, VietinBank, Agribank keep interest rates higher than Vietcombank by 0.3 - 0.4%/year. The joint stock commercial bank block previously reduced interest rates by 0.1 - 0.7%/year.
For example, on November 10, SCB reduced its deposit interest rate by 0.2 - 0.7%/year, accordingly, the deposit interest rate for terms under 6 months is 3.7 - 4%/year, 6 - 8 months is 4.9%/year, 12 months or more is 5.4%/year. Sacombank's deposit interest rate is down to 3.4 - 3.75%/year for terms under 6 months, 6 months is 4.8%/year, 12 months is 5.4%/year...
Since the beginning of November, more than 10 banks have reduced interest rates on VND savings such as BaoViet Bank, SHB, Bac A Bank, Nam A Bank... Interest rates of banks have dropped below 6%/year, this is the lowest level compared to the time of the Covid-19 pandemic in 2021 and also the lowest level in the past 5 years.
The survey results of the Vietnam Banking Association (VNBA) at 28 banks that announced their financial statements for the third quarter of 2023 (accounting for about 75% of the total assets of the entire system and excluding Agribank) showed that by the end of September, these banks had mobilized more than VND 9.3 million billion in customer deposits, an increase of 11.5% compared to the end of 2022. HDBank continued to be the bank with the strongest increase in deposit balance, up 58.3% since the beginning of the year, reaching VND 341,700 billion. In terms of absolute balance, BIDV held the top position with more than VND 1.58 million billion in customer deposits, an increase of 7.5% compared to the beginning of the year. Next are Vietcombank and VietinBank with deposit balances reaching nearly VND 1.35 million billion and VND 1.31 million billion, respectively (up 8% and 5% respectively).
Dr. Nguyen Huu Huan (Ho Chi Minh City University of Economics) commented: Savings interest rates have never decreased as much as they have now. However, he also said that savings interest rates have bottomed out and are unlikely to decrease further in the near future. The reason is that capital demand will increase at the end of the year, so credit growth is likely to be higher, especially in November and December. Credit growth is forecast to reach 10% in 2023. When credit increases, it will consume the bank's liquidity. According to Mr. Huan, if savings interest rates are too low, the incentive to deposit money will be reduced, so capital flows will likely flow into other channels, and this will make bank liquidity not as good as before.
Not to mention, cheap capital flowing through other investment channels will cause inflation and financial bubbles. Citing the US, periods when interest rates were at 0%/year were all periods when the economy was in crisis. Mr. Huan likened the 0% interest rate to neutralizing monetary policy and having no impact, so if interest rates were pulled down too low, it would be "self-destructing an arm". Therefore, according to this expert, the current interest rate bottom is reasonable and with increased demand, savings interest rates can stop falling like recently.
In the group of joint stock banks, Sacombank continues to lead in terms of deposit balance reaching nearly VND 507,833 billion, an increase of 11.7% compared to the end of 2022. Among the Top 10 banks with the highest customer deposits are banks such as MB, ACB, SHB, VPBank, Techcombank and HDBank. Meanwhile, the credit balance of some banks increased slowly, so they reduced savings interest rates.
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