Current, savings account ratio up

VIETNAM, February 21 –

A customer completes a banking transaction at Sacombank. Photo

HÀ NỘI — An analysis of the financial reports of 24 Vietnamese banks shows that the average ratio of current and savings account (CASA) of banks increased from 17% in 2020 to 19.4% at the end of 2021.

Techcombank leads the pack with the highest CASA ratio of 50.5%, which equates to total term deposits of VNĐ158.9 trillion ($6.99 billion).

MB came in second with a rise of 47.3 percentage points to around 48.7%.

MSB overtook Vietcombank to secure third place with around 37.7%.

Kienlongbank was among the fastest growing banks with CASA, growing 5.8x to 15.5%.

BacABank followed suit with an increase of about two times, to 3.3% last year.

The rise of CASA could also be observed in the other banks, including VIB with an increase of 4.1 percentage points and TPB with 3.9 points.

Since term deposits incur virtually no cost of capital, banks with a higher CASA are more likely to enjoy higher net interest income.

As a result, term deposits occupy an increasing share of the capital structure of banks.

While some banks have managed to increase term deposits to almost half of total deposits, others have kept it below 20%.

Experts believe that a low CASA ratio indicates that some banks are still clinging to wholesale banking and have yet to expand into other market segments.

However, because CASAs give depositors immediate access to their deposits, it also creates uncertainty as to when the money is withdrawn.

Therefore, a high CASA ratio comes with a high risk of deposit withdrawals in times of interest rate volatility.

The government recently called for a review of a directive requiring banks to reduce their short-term capital adequacy ratio for medium- and long-term loans.

This means that the ratio will not be adjusted downwards as expected in the short term.

Banks with a high CASA ratio stand to benefit greatly from the review. —VNS

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Sallie R. Loera