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| Customers deposit money at a BacABank transaction office. By the end of June 2024, the amount of non-term deposits at BacABank fell by 41.6 percent, leading to a sharp decline in the CASA ratio from 4.4 percent at the beginning of the year to 2.6 percent. Photo: baochinhphu.vn |
HÀ NỘI — Banks are under pressure to tap cheap sources of capital as the cost of capital is a key factor in banks’ profit growth.
The cheap capital sources have become more important for banks as they need to reduce lending rates to stimulate credit growth, while in the last three months they had to increase savings rates to attract savers. In this context, the cheap capital helps banks to reduce lending rates to increase their competitiveness while maintaining high net interest margins (NIM).
At banks, most cheap sources of capital come from Current Account Savings Accounts (CASA) or deposits without a term, whose interest rate of only around 0.2 percent per year is significantly lower than that of time deposits.
However, it is not easy for banks to increase the cheap source of capital. According to the financial reports of 28 banks for the second quarter of 2024, their average CASA ratio fell slightly from 15.6 percent at the beginning of this year to 15.4 percent at the end of June. Specifically, the CASA ratio of 12 banks fell, while 12 banks saw an increase and four banks remained unchanged.
The reports also showed that up to 17 out of 28 banks had a CASA ratio of less than 15 percent.
At BacABank, there was a sharp decline in non-maturity deposits of 41.6 percent at the end of June 2024, causing the CASA ratio to fall from 4.4 percent at the beginning of the year to 2.6 percent.
At PGBank, the amount of non-fixed-term deposits decreased by 12.2 percent over the same period, reducing the CASA ratio to just 14.4 percent, compared to 17.2 percent at the beginning of the year.
The decline in CASA ratio was not only seen in small and medium-sized banks, but also in large banks such as MB, Techcombank and Vietcombank, which have always been at the forefront of attracting cheap capital, which also saw a decline in demand deposits over the past six months.
Although MB held the leading position in terms of CASA ratio, it was only 37.8 percent at the end of June, compared to 39.6 percent at the end of 2023.
Techcombank’s short-term deposits also fell by nearly VNĐ1.4 trillion over the past six months, leading to a 2.5 percentage point decline in the bank’s CASA ratio to 37.4 percent.
According to experts, a low CASA ratio poses the risk that banks will be heavily dependent on capital from various sources to maintain their operations. A low CASA ratio can also increase the risk of financial risks due to market fluctuations.
If banks cannot raise their lending rates and lower their deposit rates, banks with high CASA ratios can cope with the tightening of NIM. Therefore, banks actively solicit cheap deposits to both reduce pressure on NIM and increase operational efficiency.
Từ Tiến Phát, director general of the ACB, said rising interest rates are inevitable due to market trends. However, banks must maintain strict controls and must not raise deposit interest rates quickly, as this would lead to rising capital costs and negative loan growth. Banks with large CASA amounts would have an advantage in reducing capital costs.
An MSB official said that the bank will continuously try to improve the CASA ratio by introducing more attractive products and services by the end of this year. MSB is targeting a CASA ratio of 35-40 percent in 2023-2027. — VNS
