Citizens’ deposits at banks reach new record high

Citizens’ deposits reached a new historic peak of VND6.676 quadrillion (US$262.2 billion) as of the end of March, according to the State Bank of Vietnam.

This marked a 2.2% growth from the end of 2023.

Meanwhile, corporate deposits fell 3.1% to VND6.6 quadrillion in the same period .

After a period of declining interest rates that began last March, many banks have started to raise deposit interest rates since May.

Analysts expect a rise in deposit interest rates by 0.5 to 1 percentage point, reaching around 7% per year in the year’s second half.

However, the rates are unlikely to return to the high levels seen at the end of 2022, following a bank-run incident that resulted in a private lender being placed under central bank control.

Credit growth has only reached 2.4% this year, failing to meet the targets of 5% for the first half and 15% for the entire year, which analysts attribute to a sluggish real estate market.

The local real estate sector has experienced a significant downturn, leading to major developers facing challenges in repaying debt, including bond interest and principal, due to liquidity constraints and decreasing property values.

The situation escalated at the end of 2022, following the arrest of Truong My Lan, Chairwoman of Van Thinh Phat group, who is on death row for multiple financial frauds.

The arrest was part of Vietnam’s anti-corruption campaign, which intensified in late 2021.