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| A customer conduct transactions at Vietcombank headquarters. (Photo: VNA) |
Ho Chi Minh City (VNA) – A wave of deposit rate cuts is sweeping across the banking system following the direction from the State Bank of Vietnam (SBV), in a move aimed at reducing funding costs and improving access to credit for businesses and households. However, the policy shift underscores a complex balancing act, as pressures from inflation, exchange rates, and system liquidity remain.
From market distortions to a more balanced approach
Shortly after assuming office on April 9, newly appointed central bank governor Pham Duc An convened his first meeting with 46 credit institutions, outlining key monetary policy priorities for 2026.
Under the newly announced framework, the central bank is targeting inflation at around 4.5% per annum, while maintaining a flexible and accommodative monetary stance, with readiness to provide liquidity support when necessary.
Notably, commercial banks have been instructed to reduce deposit rates by 50–100 basis points on new deposits with maturities of six months or longer, effective from April 10. The move aligns with the Government’s broader economic strategy, particularly as ambitions for double-digit growth in the coming period require a more stable and sustainable interest rate environment, rather than the sharp increases seen recently.
Following the directive, several banks moved swiftly to adjust deposit rates. State-owned lenders, including Agribank and Vietcombank, cut rates by around 0.5% per annum for longer-term deposits of 24 months and above.
Joint-stock banks such as VPBank, SeABank, BVBank and Sacombank also followed suit, typically lowering rates by 0.3–0.5%, particularly for medium- and long-term terms.
At a recent seminar, Nguyen Hung, head of TPBank, noted that the governor’s initial focus on interest rates reflected emerging market distortions. Deposit rates had surged sharply in early April, with some banks offering as much as 9% per annum for 6–12 month terms, an increase of 2–2.5 percentage points compared with the fourth quarter of 2025.
“This reflects an unusual development, given that actual capital demand has not risen significantly,” he said, attributing the spike largely to competitive rate hikes among banks seeking to attract deposits, rather than underlying economic fundamentals. With inflation at around 4%, he suggested a more appropriate deposit rate range would be 6–7%.
Flexible monetary policy management
The easing of deposit rates is gradually creating room for commercial banks to lower lending rates.
Notably, Nam A Bank has recorded one of the sharpest reductions, cutting lending rates by up to 3 percentage points per annum for individual customers from April 11. Meanwhile, KienlongBank has reduced rates by around 1 percentage point for both retail and corporate clients. Agribank has adopted a linked mechanism, whereby a 0.5-percentage-point reduction in 24-month deposit rates is mirrored by corresponding cuts in medium- and long-term lending rates.
While not yet widespread across the system, these developments signal the early stages of a broader downward trend in lending rates, in line with central bank policy.
According to Nguyen Xuan Binh, head of analysis at KBSV, deposit rates for 12-month terms are currently averaging 6–7.5% per annum, levels considered reasonable. If maintained, lending rates, including for higher-risk sectors such as real estate, could fall to around 10.5–12% per annum.
Taking a more cautious view, analysts at Mirae Asset (Vietnam) suggested that the recent coordinated rate cuts are aimed primarily at stabilising the market, rather than signalling a strong easing cycle. System liquidity continues to be managed flexibly, while credit growth remains under control.
Associate Professor, Dr. Tran Hoang Ngan, a member of the National Assembly, emphasised that monetary policy must currently pursue multiple objectives simultaneously, from inflation control and growth support to safeguarding banking system stability. Nevertheless, maintaining liquidity and overall system stability remains the top priority./.
