A savings passbook issued by the National Commercial Bank. — VNS Photo Bồ Xuân Hiệp

HCM CITY — Despite interest rate cuts by commercial banks, deposits by retail customers have continued to increase due to a lack of alternative asset classes.

The State Bank of Vietnam reported that overall bank deposits were worth VNĐ12.68 quadrillion (US$522.4 billion) as of the end of September, 7.3 per cent up for the year.

Retail deposits rose by 10 per cent to VNĐ6.45 quadrillion, the highest since 2018.

In October last year, interest rates had soared to over 12 per cent due to the Saigon Joint Stock Commercial Bank (SCB) scandal, but have since decreased to around 5 per cent now.

There was a run on SCB following the arrest of Trương Mỹ Lan, chairwoman of Vạn Thịnh Phát Group, who had control over the lender as she had held a controlling stake since a merger in 2012.

The central bank placed the lender under “special control” to head off a contagion that could affect the entire banking industry.

A supervisor at an HDBank branch in HCM City’s District 4, who asked not to be named, told Việt Nam News: “Most banks now have excess liquidity due to low lending.”

Analysts said individual depositors are not expected to move to other asset classes.

Despite the decrease in interest rates, banks’ deposits have kept rising, resulting in a surplus of over VNĐ1 quadrillion.

This has led to the central bank issuing treasury bills to mop up the liquidity and ensure there is no significant impact on interest rates.

Credit growth for the year was only 7.4 per cent as of the end of October, or just half the year’s target of 14 per cent.

Analysts now expect credit growth of only around 12 per cent since loans to property developers and mortgages, which make up 70 per cent, have plummeted.

Exports and industrial production are also facing difficulties, leading to a further decrease in demand.

This is a concern for the economy’s recovery in general, experts warned.

Prime Minister Phạm Minh Chính has at multiple meetings stressed the importance of increasing credit access and removing difficulties faced by businesses.

He has instructed the central bank to have flexible and efficient monetary policies to promote growth and ensure safety of the credit system.

State Bank of Vietnam Governor Nguyễn Thị Hồng remains optimistic that with the various measures implemented to stimulate consumption and explore new export markets, credit growth will pick up by the end of the year. — VNS