What happens to banks when deposit rates are at an all-time low?

Increase - decrease deposit

According to a survey from 27 bank Listed (except Agribank ), many banks record conflicting deposit amounts.

The group is still leading in terms of deposit size. State-owned banks, of which BIDV continues to be the bank with the largest deposits in the system, reaching nearly 1.98 million billion VND at the end of the first quarter, an increase of more than 23,000 billion VND compared to the end of 2024. VietinBank holds the second position with more than 1.62 million billion VND, while Vietcombank ranks third with 1.5 million billion VND. However, Vietcombank is one of the few banks with a decrease in deposits in the first quarter of the year, down slightly by about 5,500 billion VND compared to the end of last year.

Ranked 4th in the top 10 banks with the most deposits in the first quarter of this year is MB.

Bank deposits vary between banks.

The bank with the most impressive acceleration in the first quarter of this year is VPBank . In just the first 3 months of the year, this bank mobilized more than 66,000 billion VND in deposits. customers, raising the total scale to more than 552,000 billion VND...

In contrast to the growth momentum at many banks, some banks recorded a decrease in deposits. In addition to Vietcombank, which saw a slight decrease, Techcombank - which has always been at the top of the private banking group - also saw a decrease of nearly VND1,800 billion. Banks such as TPBank, SeABank and ABBank recorded a stronger decrease, at 4% to nearly 5%, respectively.

Talk to PV Tien Phong , Mr. Nguyen Quang Huy - Expert of Finance and Banking Faculty, Nguyen Trai University -, analyzed that the high credit growth, especially in the first months of the year, shows the recovery of confidence in the economy, and businesses are returning to production and investment activities after a period of "shrinking".

However, fundraising from the residential sector and economic organizations increased slowly or stagnated, leading to an increasingly large gap between credit growth and mobilization.

According to Mr. Huy, people do not choose bank deposit Because deposit interest rates are currently at historic lows, while expected inflation increases, making depositors feel that real interest rates are negative and unattractive. The trend of shifting assets to real estate, gold, stocks or other investment channels with higher returns is understandable, especially when the market expects interest rates to remain low for a while longer...

“The difference in rankings in the race to attract bank deposits shows that banks do not consider interest rates as a competitive weapon but instead shift the focus of competition from “cost price” to “added value”. Specifically, banks improve the quality of customer experience to become the focus: The integrated ecosystem of financial services - insurance - personal investment to retain internal capital flows…”, Mr. Huy said.

The expert said that large banks with strong technology platforms take advantage of digital ecosystems to create added value, attracting long-term and loyal cash flows. Smaller banks are forced to compete with higher interest rates, but this has its limits due to the impact on profit margins and capital reinvestment risks.

Banks seek capital from other channels

According to data from the State Bank, in the first quarter of this year, credit growth was twice as high as capital mobilization, making the gap even larger. The gap between mobilization and lending in the banking system has reached VND1.1 quadrillion.

Bank deposits are lower than credit, indicating that mobilization is growing more slowly than lending. This puts pressure on the banking system in its task of meeting the target of rapid economic growth.

Interest rate level has dropped to a low level, so banks are also facing many challenges in capital mobilization. The competition to attract deposits from banks with investment channels such as stocks, real estate, gold, etc. is becoming more difficult. To have enough resources to serve the economy, many banks have been trying to attract capital with reasonable interest rate policies, such as issuing bonds and borrowing capital from international organizations.

For example VPBank recently announced the successful implementation of an international syndicated loan deal with an initial value of 1 billion USD, with the option to expand the loan value depending on the bank's capital needs.

According to VNDirect Securities, the issuance of individual corporate bonds with long maturities, as implemented in 2024, will not only help banks increase capital mobilization but also support the improvement of medium- and long-term capital ratios.

This year, the banking group will remain active. bond issuance individual enterprises to consolidate medium and long-term capital sources, thereby contributing to promoting the recovery of the corporate bond issuance market.

Source: https://baoquangninh.vn/dieu-xay-ra-voi-cac-ngan-hang-khi-lai-suat-tien-gui-dang-thap-nhat-lich-su-3356763.html