The Founder of Integrated Financial Solutions, banking consultant Le Hoai An, has told the Vietnam Investment Review that bank lending outstripping new deposits by about 3.7 percent is putting liquidity pressure on Vietnam’s banks. He also notes that a fall in business bank deposits suggests businesses are becoming more heavily reliant on capital from banks.
Of note, last week, State Bank of Vietnam Permanent Deputy Governor Dao Minh Tu, assured attendees at a press conference that record-high bank deposits were not sitting idle with Vietnam’s banks but rather had been repurposed to make loans.
“There is no way that 14-15 million billion VND is still in the bank because the banks have lent out all the money they mobilised to the economy,” he said. It’s not clear why this needed to be clarified but it is maybe not quite as reassuring as the Deputy Governor had intended.
This would, however, give Vietnam’s banks a collective loan-to-deposit ratio of 101.38 percent which should be a cause for concern with anything above 80 percent generally considered a liquidity risk. This would support Le’s thesis with respect to liquidity pressure.
It also looks like this gap may get wider still with a credit growth target for the year of 14 percent of which just 9 percent had been reached by mid-October.
See also: It’s Time to Talk About Vietnam’s Credit Growth Policy…