The flow of deposits into commercial banks is turning out more stagnant, which is blamed on negative interest rate although institutions have sought to raise interest as high as possible, bankers said.
Banks in HCM City drew a total VND537.7 trillion deposits in the first half of this year, increasing 10 per cent from early this year and averaging out at a monthly mobilization growth rate of 1.67 per cent, the lowest rate in the past five years.
Last year, the average growth rate in mobilization was 3 per cent-4 per cent a month.
The flow is even dwindling lately, said an official with the State Bank of Vietnam's HCM City branch, adding that July mobilization of banks in the city was estimated to increase only 0.7 per cent against the previous month.
At a seminar on providing finance for small and medium enterprises in the city last week, Pham Huy Hung, chairman of Vietnam Bank for Industry and Trade (VietinBank), said that public capital do not flow much to banks despite high rates.
"VietinBank with three main transaction offices, 140 branches, and 165 transaction sites nationwide has widened working hours but the bank's mobilization in the first half this year grew only 5 per cent from late 2007, compared to annual growth of 10-15 per cent in previous years," the bank's chairman said.
In fact, mobilization in Vietnam dong of VietinBank in January-June this year even decreased by VND354 billion, providing a difficult time in mobilization at banks, he stressed.
Hung, who also serves as chairman of the Vietnam Banks Association, said that many banks were facing the same problem as VietinBank.
He explained that due to high inflation rate, many people have bought the U.S. dollars and gold as safe havens.
Furthermore, many enterprises and citizens also tended to make payment transactions outside the banking system due to difficulties in obtaining bank loans in Vietnam dong.
Hung cited a survey of the World Bank that 35 per cent of total amount of money has flown out of banking system and 50 per cent of total payment was not made via banks.
An executive with the HCM City branch of Bank for Investment and Development of Vietnam (BIDV) said that his branch had seen hundreds of billions of dong moving out in the last one month because institutional customers withdraw capital.
Since early this year, the branch had no new institutional depositor because BIDV's interest rates were lower than others, he said. In July, the branch's mobilized fund was forecast to fall by 0.5 per cent from the previous month.
Meanwhile, the general director of a small bank in HCM City said that in February and March mobilized funds at his bank increased by over 30 per cent from late 2007. The growth, however, gradually decelerated and the amount of mobilization barely increased in recent months. (Saigon Economic Times)
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