Hanoi (VNS/VNA) - The race to lure demand deposits,or current account savings account (CASA), among banks seems to be deceleratingas it is more difficult for them to attract the cheap capital source in thecontext of high interest rates on term savings.

Demand deposits at banks are mainly from customers’ payment accounts.Previously, due to low interest rates on term deposits, a number of customersdid not pay much attention to transferring idle money in their payment accountsto term deposit accounts. Banks, therefore, raced to lure customers with manyincentive policies to benefit from the low-cost capital source.

However, the trend has changed after interest rates for term deposits sharplysurged to hit nearly 10% per year, which has caused more customers to selectterm savings to get higher interest rates.

According to the Q4 2022 financial report of banks, up to 23 out of 28 banks,even big names, have recorded a decrease in CASA ratio last year.

Specifically, Techcombank, which topped in terms of CASA for many years, sawits CASA ratio decline sharply from 50.5% at the end of 2021 to 37% at the endof 2022.

Despite surpassing Techcombank to top the CASA list in 2022, MBBank alsoreported a CASA decline from 44.6% at the end of 2021 to 37.6% at the end of2022.

According to Techcombank, the CASA ratio dropped sharply because customers havetended to reduce cash holdings for investment or spending, but increase openingterm savings accounts in the context of the global high interest rateenvironment, restricted liquidity of the banking system and negative sentimenton the real estate and bond markets.

However, Techcombank noted, the bank took measures to increase its termdeposits to ensure capital, with Q4 2022 seeing a growth rate of 32.3% in termdeposits against Q3 2022.

Many other banks also recorded a sharp drop in CASA ratio in the past year suchas KienlongBank (from 15.5% to 4%), VietABank (11.9% to 4.1%) and TPBank (23.3%to 18%).

However, there were still some banks recording an increase in CASA ratio in2022 compared to 2021 such as VietinBank (with a slight increase of 0.1percentage point to 20%), PG Bank (with a 2.5 percentage point increaseto 17.9%), and Bac A Bank (with a 3.9 percentage point rise to 7.3%).

Economist Dinh Trong Thinh said that the term deposit interestrate has continuously increased, especially in the last quarter of 2022, whileother investment channels such as securities, real estate, gold, andcryptocurrencies have been less attractive and continuing the downward trend fora long time.

“This was why cash flows look to long-term savings channels to enjoy highinterest rates. As a result, the amount of demand deposits decreased sharply,and the input capital also became more expensive,” he said.

According to Thịnh, improving the CASA ratio, controlling capital costs, andconcentrating resources to support firms and people to recover production andbusiness are posing big problems for banks, especially in the context ofinterest rates being forecast to remain high in the first half of 2023. Becausewhen interest rates are high, individual customers transfer their idle moneyinto term savings instead of keeping them in current accounts. As for firms,high interest rates made it difficult for them to access bank capital, therebythey had to withdraw available cash to serve their operations.

According to experts of Vietcombank Securities Company (VCBS), the State Bankof Vietnam’s policy interest rates in 2023 may not increase further. Afterpeaking in the first half of 2023, the rates will be flat and gradually cooldown in the second half of this year.

Sharing the same view, Yuanta Vietnam Securities Company (Yuanta) believes asthe interest rate on term deposits is still high and the liquidity of thebanking system remains limited, the growth of demand deposits will be low inthe first half of 2023. However, Yuanta expects the CASA ratio to improvefurther as deposit rates gradually cool down in the second half of this year.

Besides, Yuanta said in the context of rising interest rates, banks with theadvantage of a high CASA ratio such as MB, Techcombank and Vietcombank willsuffer less negative impacts on net profit margin than banks with a low CASArate.

Meanwhile, SSI Securities Company’s experts are more optimistic as, based ondata analysis, they forecast the CASA ratio will be affected adversely only inthe short term and will recover in the near future./.