Over the past two years, there has been a consistent increase in deposit flows in the banking system. However, as of the end of January 2024, data from the State Bank showed that people depositing money at banks amounted to about 6.5 million billion VND, a decrease of nearly 35,000 billion compared to the beginning of the year. This marked a shift from the previous trend of steady increases and represents a decrease of over 0.5%.
Residential deposits decreased for the first time in over two years, and businesses and organizations also reduced their deposits in banks. As of the end of January, businesses and organizations held deposits amounting to 6.67 million billion VND, which was 165,000 billion VND less than at the start of the year, representing a decrease of over 2.4%. On the other hand, data from the General Statistics Office showed that capital mobilization in credit institutions decreased by 0.76% compared to the beginning of the year, a shift from the increase seen in the same period last year.
The decline in deposits can be attributed to several factors, including prolonged low interest rates and limited investment opportunities. Most banks offer deposit rates of no more than 5% per year, which is not enough to attract new depositors or retain existing ones who are seeking better returns on their investments. In response to this challenge, many banks are considering increasing deposit interest rates to retain depositors and ensure abundant liquidity in the banking system despite limited credit growth.
In summary, while there has been a consistent increase in deposit flows in recent years, this trend has shifted as people seek better investment opportunities with higher returns. The decline in residential and business deposits can be attributed to various factors such as low interest rates and limited investment opportunities. Banks are responding by increasing deposit interest rates to retain depositors and ensure liquidity in
