Cheap capital returns to banks

The balance of individuals’ current account savings accounts (CASA) in banks reached a record high of more than VND1.19 quadrillion - photo: Van Anh

The State Bank of Vietnam (SBV) recently updated data on individual payment deposit accounts as of the end of the third quarter (Q3) of 2024. These are individuals’ current account savings accounts (CASA) used for payment services provided by banks, such as card services and non-cash, non-card payment solutions.

As of the end of Q3, the total number of individual payment accounts in the banking system was 197.97 million, an increase of 4,231 accounts year-on-year. By the end of Q3, the account balances increased by VND7 trillion to reach more than VND1.19 quadrillion, a historical high.

Compared to the end of 2023, the balance of individual payment accounts in the banking system increased by VND100 trillion, while the number of accounts rose by 15,087.

The development of digital banking and non-cash payment solutions has spurred a “skyrocketing” growth of individual payment accounts’ value in recent years. Non-cash payment methods have expanded significantly, covering rural areas, border regions, and islands.

ATM and POS networks have been installed in all districts, towns, cities, and provinces nationwide. Additionally, QR code payment networks now cover most convenience stores, retail chains, restaurants, hotels, and are gradually extended to healthcare facilities, hospitals, and schools.

According to the payment department of the SBV, as of the end of Q3, domestic payment transactions via bank cards totaled over VND 367.117 trillion, and payment orders and authorization orders amounted to more than VND73.4 quadrillion. Mobile banking transactions reached VND17.84 quadrillion.

As of the end of September 2024, total individuals’ deposits in banks exceeded VND6.9 quadrillion, with CASA accounts representing about 17 percent of the total.

Over the past five years, personal current deposits have grown 2.7 times in value, while the number of payment accounts increased 2.3 times. Currently, nearly 90% of adults in Vietnam have a bank account, and many banks reported that over 95% of transactions occur through digital channels.

Financial experts highlight the significance of strong growth in current deposits for banks’ operations, as this source carries very low interest rates. A higher CASA ratio provides banks with a competitive edge to optimize funding costs, improve net interest margins (NIM), and enhance profitability. Conversely, a decline in the CASA ratio could pressure a bank’s NIM.

In addition to individual current deposits, enterprise current deposits also contribute to CASA balances. Experts note that personal deposits tend to be more stable, while enterprise deposits are often more volatile due to seasonal factors.

According to commercial banks, as of the end of September 2024, six banks recorded a CASA ratio of above 20%, including Techcombank, MB, Vietcombank, MSB, VietinBank, and ACB. Techcombank took the lead with a ratio of 36.9% (40.5% if automatically profitable balances are included).

Meanwhile, Vietcombank reported the highest CASA balance at over VND466 trillion as of the end of September 2024. VietinBank showed the highest CASA balance growth in the first nine months of 2024, increasing by VND33 trillion to VND351 trillion. VietinBank’s CASA ratio stood at 23.1%, the fifth-highest in the system./.