As per set target, the deposit interest rate is on the right track, as commercial banks have reduced their input costs by 2% to 2.5% in only a short time. However, the rate of loan interest reduction still continues under an old scenario, and not lower deposit rates. The reason is the effect of the Covid-19 pandemic, and risky credit extension of banks, so the net profit margin (NIM) must be extended to prevent rising bad debts.
The question then arises of idle money that has not gone to commercial banks or mobilized by banks, but which cannot be lent. The first reason points to General Statistics Office data which shows that the total capital mobilization for the economy from the stock market in 2020 is VND 383,600 bn, an increase of 20% compared to the same period last year. By the first quarter of 2021, it is estimated at VND 55,562 bn, up 42% over the same period last year.
The capital mobilization level of the stock market increased strongly at the same time that individual investors participating in the market surged. According to the Securities Depository Center, accumulated for the whole of 2020, there were 393,659 securities trading accounts of domestic investors newly opened, of which individual investors have 392,527 accounts, about 99.7%. This is the largest number of accounts opened by individual investors in just one year, and the highest in the past twenty years. The number of new investors opened has led to the deduction that the stock market has become a nozzle of idle money in recent years.
The second reason is the real estate as a notable channel when investors do not prefer to put idle money in savings channel. According to the Vietnam Real Estate Brokerage Association, people in many localities have quit their businesses, quit production to invest in land, and bank deposits are also being withdrawn to invest. According to the R&D department of BHS Group, the interest of investors in the real estate market is reflected in the steady increase in transactions during the last months of 2020 and early 2021.
The third reason is in the fact that the idle cash flow is moving away from the savings channel, which is not a problem that credit institutions are too concerned about at the moment, when credit congestion and excess liquidity are still continuing. The rate of credit or deposit at banks is being kept at an average of 72.4%, much lower than the limit of 85%. Therefore, information shows that credit institutions may be pumping more capital into these investment channels. For example, the rate of credit growth to GDP in 2020 has increased 4.1 times, higher than the average rate of 2% to 2.5% in recent years.
The rapid rise of the stock market has attracted investors, and also created a need to borrow money to invest in the secondary market, and the phenomenon of credit surges related to this issue. Also in the real estate channel, the data of the State Bank showed that as of 15 March, the banking sector's real estate loan balance increased by about 2.13% compared to the beginning of the year. Credit growth in this area was higher than the overall credit growth rate of the economy, by about 2.04%.
Recently, the Ministry of Planning and Investment warned that capital source is focusing on some potentially risky areas, rather than serve production and business expansion. According to the ministry, in coming time, it will be necessary to pay attention to development of the above markets so that we can prevent a potential bubble and many risks pertaining to the economy. Thus, three times reduction of operating rate and the short-term ceiling interest rate in 2020 has not met the expectations of businesses and the economy. Cash flow tends to leave savings channel, joins other investment channels and in turn attracts more credit from banks.