Banking deposits seem both safe and profitable during Covid-19

04-Jul-2020 Intellasia | Thoi bao Kinh doanh | 6:02 AM Print This Post

According to experts, all investing channels are risky. Real estate market plummets while business production is slowing down. The stock market is assessed to be in the most difficult period of the year. Therefore, in the current context, safe channel for money is savings.

Following the General Statistical Office, as of June 19, 2020, the total means of payment increased by 4.59 percent at the end of 2019 (6.05 percent at the same time last year); capital mobilisation of credit institutions grew by 4.35 percent (the same period in 2019 by 6.09%).

From the data of the State Bank of Vietnam (SBV), at the end of 2019, the total deposits of individuals and economic organisations at credit institutions (CI) reached more than 8.79 quadrillion dong. Thus, by June 19, total deposit was nearly 9.2 quadrillion dong.

Notably, in the first four months of 2020, the total deposits at the CI system increased by only 0.07%. In particular, deposits of economic organisations plummeted by 3.9 percent while deposits of individuals still increased by 3.36%. Thus, only in the last two months of the second quarter of 2020, the amount of deposits flowing into the banking system rose sharply to 5.3 quadrillion dong.

Although the increase in capital mobilisation in the first six months of 2020 was lower than the same period last year, but in the context of disease outbreaks, the economy faced many difficulties. In particular, credit growth reached the lowest level in the past four years, the number of capital mobilisation growth was still impressive. According to the General Statistical Office, the credit to June 19 only increased by 2.45 percent compared to the end of 2019, which is also the lowest increase in the same period of 2016-2020.

On the other hand, within the past two months, deposit rates at banks have been continuously reduced due to the pressure of banks’ cost of fund to support the businesses affected by the Covid-19 pandemic.

In fact, in recent years, a series of banks have reduced deposit rates. Even in June, a number of commercial banks in the market had a slight adjustment from 0.2 to 0.5 percent per year in some terms. Not only cut interest rates for terms of less than six months to a maximum of 4.25 percent per year as prescribed by SBV, interest rates for long terms also decreased.

For example, Viet Capital Commercial Joint Stock Bank (Viet Capital Bank) slightly decreased by 0.05 0.1 percent per year of deposit rates for terms of less than six months to 4.2 percent per year, six months to 6.9 percent per year, 12 months to 3 percent per year. Vietnam Export Import Commercial Joint Stock Bank (Eximbank) has reduced interest rates for six-month terms to 5.6 percent per year and 12-month to 7.2 percent per year. Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) is currently paying six-month savings interest rates at 6 percent per year; 6.7 percent per year for a term of 12 months; 24 and 36 month terms with the same interest rate of 6.7 percent per year for regular savings.

Interest rates in Big Four are even lower. Vietcombank, VietinBank, BIDV and Agribank currently mobilise nine month deposits with interest rates of only 4.9-5.1 percent per annum. The interest rate for 12-month term and above is only about 6.5-6.6 percent per year.

According to economists, in the context of the global economic volatility caused by the Covid-19 pandemic, investors need to accurately identify investment areas, select channels with lowest risks and diversify the portfolio to have the opportunity to create profits. The more profitable investment channel is followed by the greater risk.

Previously, real estate was the most interesting channel because of the huge profits. In recent years, this channel has been less attractive to investors due to the policies of regulators to tighten real estate market.

With the gold investment channel, according to finance and banking expert Nguyen Tri Hieu, the fluctuation of gold price depends on many factors, so it always changes complicatedly. Gold has always been a risky investment channel, so Hieu said that investors should consider when pouring money into gold market this year. According to Hieu, with the psychology of safety, people have long chosen the banking channel. Although this is not a big profit channel, it is not as risky as gold, real estate, securities, etc.

Le Xuan Nghia, member of the National Financial and Monetary Policy Advisory Council, also said that channels such as securities and gold were still affected by the Covid-19 pandemic, so savings deposits will be channels to ensure the safest for investors. Although this channel is not profitable, investors can be assured that this is the least risky channel in the investment channel.

Sharing the same view, Investment Advisory director of Maybank Kim Eng Vietnam Securities Company, Phan Dung Khanh said: “The Covid-19 pandemic directed cash flows into safe investment channels such as gold, deposits, savings, and government bonds. In particular, the banking deposits are also flexible because investors can quickly withdraw to switch to other channels when there is opportunity”.


Category: Finance, Vietnam

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