Bank Deposits Decline After Consecutive Months of Growth
Vietnam Banking System Faces Capital mobilization Challenges in Early 2025
HANOI (AP) — Vietnam’s banking system experienced a slight decrease in total capital mobilization in January 2025, according to a recent report by the State Bank of Vietnam (SBV).The report indicates a total of 14.62 million VND mobilized, a 0.75% decrease compared to the end of 2024.
Decline Driven by Institutional Deposit Decrease
While housing deposits saw a rise of 123 trillion VND (1.74%) in January, the overall capital procurement of banks declined due to a critically importent drop in deposits from economic institutions.
Specifically, deposits from economic institutions decreased by 233 trillion VND in January, a 3.04% decrease compared to the end of the previous year.This decline interrupts a five-month period of increasing capital raising from these institutions, occurring despite banks’ efforts to bolster funds in anticipation of robust credit growth in 2025.
In contrast, December 2024 saw a smaller increase of 65 trillion VND in personal deposits, while institutional deposits increased by nearly 40 trillion VND month-over-month.
By the close of 2024, capital procurement was approximately 1 trillion VND lower than credit, a difference of 157 billion copies.
Mobilization Growth Lags Behind Loan Growth
As of March 25, 2025, the National Statistical Office reported a 1.36% increase in creditors’ capital raising, with the overall economy experiencing a 2.49% increase. This resulted in a gap of 11 billion VND between mobilization and loans within the banking system as of March 25.
The slower growth in mobilization compared to loans is placing pressure on the banking system to meet its rapid growth objectives.
Concerns over Economic Growth Targets
Dao minh Tu, Governor of the SBV, stated at the end of February 2025 that achieving an economic growth target of 8-10% presents a significant challenge for the banking industry.
The country’s GDP stands at 120 billion VND, while unprecedented credit levels reach approximately 160 billion VND, representing 135% of GDP. “From a macroscopic point of view, this is a problem we are concerned about, but it is indeed still a matter of effort according to the political resolution of the party, the government and each class,” said Gov. Tu.
According to the vice president, banks are lending more to the economy than they can mobilize. For every nine dongs mobilized, banks are lending ten, covering the shortage with equity and loans from the SBV.
SBV Pledges Support for Liquidity and Credit
The SBV has stated its intention to support growth by providing credit capital and liquidity support to banks. The central bank also indicated that capital this year will be concentrated in priority sectors, with a strong emphasis on promoting consumer credit.
In addition to liquidity support, the SBV aims to stabilize operating interest rates to facilitate further reductions in loan rates.
Challenges to Interest Rate Stability
However, stabilizing interest rates presents a difficult challenge for the SBV, given complex trends in U.S. tax policy, rising gold prices, and an overheated domestic real estate market.
Vietnam Banking System: Capital Mobilization Challenges in early 2025
What Challenges is the Vietnamese Banking System Facing in Early 2025?
According to a report from the State Bank of Vietnam (SBV), Vietnam’s banking system experienced a slight decrease in total capital mobilization in January 2025.Specifically, total capital mobilization was 14.62 million VND, a 0.75% decrease compared to the end of 2024. This is primarily due to a drop in deposits from economic institutions.
Why Did Capital Mobilization Decline in January 2025?
The decline in capital mobilization was primarily driven by a drop in deposits from economic institutions. Deposits from these institutions decreased by 233 trillion VND in January,a 3.04% decrease compared to the end of the previous year. This decline interrupted a five-month period of increasing capital raising from these institutions, despite banks’ efforts to bolster funds in anticipation of robust credit growth in 2025.
What happened to other types of deposits, like housing and personal?
While the overall capital procurement declined due to the drop in institutional deposits, housing deposits actually saw a rise of 123 trillion VND (1.74%) in January. In December 2024, a smaller increase of 65 trillion VND was seen in personal deposits.Institutional deposits increased by nearly 40 trillion VND month-over-month in December 2024.
Is Capital Mobilization Keeping Pace with Loan Growth?
No, mobilization growth is lagging behind loan growth. As of March 25, 2025, the National Statistical Office reported a 1.36% increase in creditors’ capital raising, while the overall economy experienced a 2.49% increase.This created an 11 billion VND gap between mobilization and loans within the banking system as of March 25.
What are the SBV’s Concerns Regarding Economic Growth?
The Governor of the SBV, Dao Minh Tu, stated at the end of February 2025, that achieving an economic growth target of 8-10% presents a notable challenge for the banking industry. The country’s GDP is 120 billion VND, while credit levels are approximately 160 billion VND, representing 135% of GDP. The SBV is concerned about this high credit-to-GDP ratio.
What Actions is the SBV Taking to Address These Challenges?
The SBV is taking several steps to support the banking system and the economy:
- Providing credit capital and liquidity support to banks.
- Concentrating capital in priority sectors.
- Promoting consumer credit.
- Stabilizing operating interest rates to facilitate further reductions in loan rates.
What are the Challenges to Interest Rate Stability?
Stabilizing interest rates presents a difficult challenge for the SBV, given complex trends in U.S. tax policy, rising gold prices, and an overheated domestic real estate market.
Key Financial Data Summary (As of Early 2025)
Hear’s a concise summary of key financial figures mentioned from the article:
| Metric | Value | date | Change Compared to Previous Period |
|---|---|---|---|
| Total Capital Mobilization | 14.62 million VND | January 2025 | -0.75% (compared to end of 2024) |
| Decline in Deposits from Economic Institutions | 233 trillion VND | January 2025 | -3.04% (compared to the end of 2024) |
| Housing Deposits Increase | 123 trillion VND | January 2025 | +1.74% |
| GDP | 120 billion VND | Early 2025 | – |
| Credit Levels | Approximately 160 billion VND | Early 2025 | – |
| Capital Raising (Overall Economy) | 2.49% | March 25, 2025 | – |
| Creditors’ Capital raising | 1.36% | March 25, 2025 | – |
| Gap between Mobilization and Loans | 11 billion VND | March 25, 2025 | – |