Deposits in banks hit record heights, undeterred by subpar interest rates.

Whoa, hold onto your pockets, folks! Vietnam's credit institutions are swimmin' in money! According to the State Bank of our website, total deposits reached an eye-popping nearly VNĐ15 quadrillion (US$590.6 billion) by the end of March, markin' a 1.83% increase from last month.

But what's really catchin' people's eyes is the individual deposits, which smashed a record high of nearly VNĐ7.5 quadrillion, climbing 5.73% since the start of the year. And guess what? March witnessed an additional VNĐ103.8 trillion in individual deposits, showin' a strong penchant for cash even with super-low interest rates.

On the other side, economic enterprise deposits settled at slightly over VNĐ7.5 quadrillion, sizzlin' down 1.92% compared to the end of 2024. But compared to February, this figure jumped over VNĐ158 trillion, signals of recoverin' business gumption.

As for interest rates, commercial banks' rates remained steady, with đồng deposits ranged from 0.1 to 0.2% per annum for non-term and under-one-month deposits; 3.1 to 4% for terms of one to under six months; 4.5 to 5.4% for six to 12 months; 4.8 to 6% for 12 to 24 months; and 6.9 to 7.1% for terms longer than 24 months.

Analysts at MBS Securities predict a gentle uptick in deposit interest rates before year-end, fueled by rosy economic growth prospects and the possibility that credit growth could meet or exceed the 16% annual target.

MBS anticipates credit expansion for the year to reach 17-18%, propelled by a rebound in manufacturing, domestic consumption, and faster disbursement of public investment.

Similarly, ABS Research notes that with liquidity and manageable inflation pressure, interest rates are likely to stay low or slide slightly in the near term. However, upward pressure could emerge from gradually intensifyin' credit demand and escalatin' investment in real estate and the stock market.

In the first quarter, average deposit interest rates remained stationary, tickin' up marginally by 0.08%. Meanwhile, lendin' rates fell by 0.4% compared to the end of 2024, indicatin' the banking sector's efforts to support businesses and drive economic recovery.

Now, let's dig into why individual deposits are soarin' despite rock-bottom interest rates. Factors include:

In March alone, individuals deposited an additional VNĐ103.8 trillion (over US$4 billion). - VNA/VNS Photo Trần Việt

Economic Stabilization and Confidence: Vietnam's economy is gradually stabilizin' and strengthenin', steerin' people's faith in bank savings as a secure option.
Improved Banking Sector Outlook: Analysts believe the banking industry will enjoy better profitability and asset quality this year, makin' 'em confident in lendin' more money.
Supportive Government Policies and Legal Improvements: Government policies help resolve collateral and debt-related legal issues, reducin' risks for credit institutions and boostin' depositor confidence.
Limited Attractive Alternatives: Although interest rates stay low, other investment avenues may be seen as riskier or less accessible, steerin' folks to deposit money for safety and liquidity.

So there ya have it! While interest rates remain low, folks in Vietnam are still pumpin' their money into the banks. It's all about economic stabilization, improved bank credibility, government support, and preferring the safety of cash over other options.

Despite the current low interest rates, the surge in individual deposits in Vietnam could be due to a combination of factors, including economic stabilization and confidence in the banking sector, improved outlook for the industry's profitability and asset quality, supportive government policies, and limited attractive alternatives for investment.
Analysts at MBS Securities anticipate a slight increase in deposit interest rates before the end of the year, fueled by positive economic growth prospects and the possibility of meeting or exceeding the 16% annual credit growth target.
With liquidity and manageable inflation pressure, ABS Research predicts that interest rates will stay low or slide slightly in the near term, but upward pressure could emerge from increasing credit demand and investment in real estate and the stock market.