Deposits flowing back into banks

According to the financial reports of banks for the first half of 2024 released in the past week, Vietnam's four largest state-owned commercial banks hold the highest customer deposit amounts, totalling approximately $267 billion.

Among them, Agribank leads with a deposit balance of approximately $76.25 billion, up 0.9 per cent compared to the end of last year. BIDV is in second place with total deposits of approximately $75.42 billion, an increase of more than $4.25 billion compared to the beginning of the year.

VietinBank follows with a balance of approximately $61.25 billion, up 4 per cent; Vietcombank is fourth with approximately $57.08 billion, a decrease of 1.5 per cent from the end of last year.

Among commercial banks, MB holds the more than $25.76 billion in deposits, a 9 per cent increase from the beginning of the year. Sacombank follows with approximately $22.88 billion, up 7.5 per cent.

Three banks, ACB, Techcombank, and VPBank, also saw growth of around 6 per cent. ACB and Techcombank achieved approximately $21.48 billion and $20.08 billion in deposits, respectively. VPBank recorded a deposit growth of 6.6 per cent, reaching approximately $19.22 billion, creating a gap of over $500 million compared to SHB.

The influx of customer deposits into banks is driven by the interest rate hike competition since May and the risks associated with investment assets amid market instability.

“The current rate of deposit interest rate increases is in line with market developments. The recent wave of rate hikes will make savings deposits more attractive. Rising deposit rates are leading investors back to the savings channel, which is safe and offers good returns compared to other riskier investment channels,” said Nguyen Huu Huan, head of Financial Markets at the University of Economics Ho Chi Minh City.

In the first six days of August alone, six banks have continued to raise deposit rates: Agribank, Eximbank, Sacombank, Saigonbank, HDBank, and TPBank. Sacombank, in particular, has raised rates twice in less than a week.

As of early this week, the average 12-month deposit interest rate has reached 6 per cent per annum, and the 18-month rate has hit 6.1 per cent per annum. Last week, the State Bank of Vietnam net withdrew approximately $2 billion via the open market operations.

Meanwhile, the stock market suffered a shock drop at the beginning of this week, with the VN-Index closing at 1,208 points on August 8.

"Investors are following a global asset sell-off wave despite a favourable macroeconomic situation and stable businesses. Although downward pressure remains, current risks are much lower compared to the market's potential for price increases,” said Nguyen The Minh, head of Research and Development for Retail Clients at Yuanta Securities Vietnam.

In the domestic market, the real estate and corporate bond sectors are still struggling and remain in the phase of gaining momentum.

“The time for the real estate bond market to find a new equilibrium is approximately 1-2 years, after which it is expected that the market will show clear recovery starting from 2026. The latter half of this year and 2025 will be crucial for observing which companies will continue to gain an edge and expand their market share in a favourable funding and business environment,” said Le Hong Khang, manager of Credit Ratings at FiinRatings.

Deposit interest rates continue to rise Banks have continued to raise deposit interest rates to the highest levels seen in the past year, with some banks offering over 6 per cent per annum.

Homebuyers reluctant to take out loans despite low interest rates Concerns about rising floating interest rates and stringent borrowing conditions have subdued the demand for home loans among individuals and investors, despite record-low rates.

Promising investment sectors for second half Stocks, industrial real estate, gold, and cryptocurrency are identified as noteworthy investment opportunities in the second half in the context of Vietnam's economic landscape, which has shown positive signals in the first half of 2024.