Banks struggle to increase CASA ratio amid low credit growth

May 27, 2024 | 16:31
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The current account savings account (CASA) ratio witnessed a significant decline in the first three months of this year, prompting banks to almost unanimously adopt technology policies and 'zero fee' initiatives to attract new customers.

The downward trend in the ratio is significant as by the end of the first quarter, the total credit growth of the entire banking system had only increased by about 1.34 per cent compared to the end of 2023, with negative growth in the first two months of the year at minus 0.72 per cent, according to the State Bank of Vietnam (SBV).

This is the lowest recorded figure since 2016, indicating that credit demand in the economy has not recovered quickly. This is also reflected in the total social investment capital, which in the first quarter was estimated to grow only 5.2 per cent compared to the same period last year. The private sector, which accounts for more than 50 per cent of total social investment, grew only 4.2 per cent on-year.

Banks struggle to increase CASA ratio amid low credit growth

Banks struggle to increase CASA amid low credit growth and rising competition

Dr. Nguyen Tri Hieu, an economic expert told VIR that, "The decline in credit growth leading to a corresponding decrease in CASA might be seasonal, but there is also the issue of whether traditional banks' competition for CASA, based on technology platforms, has reached a saturation point, not to mention the fierce competition from new types of banking services."

Opening an account includes various fees such as account opening, maintenance, management, account closure, and SMS balance notification fees. For credit cards, customers also pay similar fees, but some fees, such as card issuance, annual fees, and ATM cash withdrawal fees, are significantly higher than for regular payment cards.

Embracing the trend of open banking, banking services will not only exist on the banks' own channels but will also be embedded and integrated into third-party software, providing simplicity, convenience, and cost savings for customers.

Tran Long, deputy general director of BIDV said, "Recently, BIDV has invested substantial resources in digital transformation activities and continuously launched new innovative financial solutions, including achievements in open banking operations that BIDV has been offering to customers on the Open API platform."

Most recently, the first three-month financial reports from 27 domestic commercial banks showed that total customer deposits across the industry increased only slightly by 0.7 per cent compared to the end of 2023. The Big 4 banks still lead in attracting the largest deposits, with total deposits exceeding $187.92 million, an increase of $22.69 million compared to the end of 2023, accounting for nearly 46 per cent of total customer deposits in the entire system.

Specifically, BIDV leads with total deposits in the first quarter exceeding $70.83 million, up 1.8 per cent from the end of 2023. VietinBank ranks second with a deposit balance exceeding $58.33 million, up 1.2 per cent. Vietcombank follows with total customer deposits in the past quarter at $54.17 million, down 3.4 per cent, ranking third.

In terms of CASA, a significant indicator, more than half of the banks recorded a decrease in CASA ratios in the past quarter. Techcombank's CASA ratio stood at 40.1 per cent at the end of the first quarter; MB dropped to second place with 36.1 per cent, down 3.5 percentage points from the end of 2023. Vietcombank's CASA ratio was 33.2 per cent, down 0.7 percentage points from 33.9 per cent at the end of 2023.

BIDV also saw a decrease in CASA to 18.5 per cent, down 1.3 percentage points. Sacombank reached 18.3 per cent, down 0.1 percentage points, and VPBank reached 14.4 per cent, down 3 percentage points. PGBank dropped by 3.6 percentage points; HDBank decreased by 2.6 percentage points; SHB and VietBank decreased by 2.3 percentage points; Bac A Bank and Eximbank decreased by 1.9 percentage points; Nam A Bank decreased by 1.3 percentage points; KienlongBank decreased by 0.6 percentage points; and SeABank decreased by 0.2 percentage points.

MSB maintained its fourth position among banks with the highest CASA ratio at 29.2 per cent, up 2.9 percentage points on-year. TPBank followed with 24.4 per cent, up 1.8 percentage points from the end of 2023, and several other banks saw a slight increase in CASA.

"MB's BAAS service allows businesses to manage transactions visually with real-time transaction details, optimising operations and saving time and costs. Integrating BAAS, businesses can develop new products, such as integrating APIs to diversify operational functions and management efficiency for their customers," said Vu Thanh Trung, a member of the Executive Board of MB.

By Hazy Tran

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