Current, savings account ratio on the rise

A client conducts a bank transaction at Sacombank. Photo dangcongsan.vn

A financial report analysis of 24 Vietnamese banks shows that the average Current and Savings Account (CASA) ratio of the banks rose from 17 per cent in 2020 to 19.4 per cent in late 2021.

Techcombank led the field with the highest CASA ratio of 50.5 per cent, equivalent to total non-term deposits of VNĐ158.9 trillion (US$6.99 billion).

MB came in second with a climb of 47.3 percentage points, to about 48.7 per cent.

MSB surpassed Vietcombank to secure third with around 37.7 per cent.

Kienlongbank was among the banks with the fastest-growing CASA, increasing 5.8 times to 15.5 per cent.

BacABank followed suit with a roughly twofold increase, to 3.3 per cent last year.

The uplift in 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.

As non-term deposits incur almost no cost of capital, banks with higher CASA are more likely to enjoy higher net interest income.

Accordingly, non-term deposits are taking up an increasing portion of banks’ capital structure.

While some banks managed to raise their non-term deposits to nearly half of total deposits, others still kept it below 20 per cent.

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

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as CASAs give depositors immediate access to their deposits, it also creates uncertainty regarding when money is withdrawn.

Consequently, a high CASA ratio comes with a high risk of deposit withdrawal during times of volatile interest rates.

The Government has recently called for the reconsideration of a directive that requires banks to bring down their ratio of short-term capital for medium- and long-term loans.

That means the ratio is not going to be adjusted down as planned in the short term.

Banks with a high CASA ratio are expected to benefit greatly from the reconsideration. — VNS