Vietnam Banking System Faces Liquidity Shortage Despite SBV Rate Pressure

Overview

Vietnam’s banking system is experiencing a liquidity shortage, with deposit rates remaining elevated despite recent cuts and pressure from the State Bank of Vietnam (SBV) to lower rates. This situation affects major listed banks including Vietcombank (VCB), BIDV (BID), VietinBank (CTG), and Techcombank (TCB), potentially impacting their funding costs and net interest margins.

Key Facts

• The State Bank of Vietnam summoned 46 banks to discuss measures to reduce and cool interest rates.
• Approximately 30 domestic commercial banks announced deposit rate cuts since April 10, with adjustments typically ranging from 0.1-0.5%.
• The system-wide loan-to-deposit ratio has increased from 95% in 2021 to 112% currently, indicating significant liquidity pressure.
• Interbank VND interest rates fell sharply during the week of April 13-17, with overnight rates dropping to 4%/year (down 2%).
• Some banks continue to offer effective deposit rates above 8%/year through promotions, including VPBank (up to 8.7%) and NCB (up to 8.55%).
• MB Bank CEO Phạm Như Ánh stated that “the system is fundamentally short of money” and deposit mobilization remains difficult.

What Happened

According to statements from MB Bank CEO Phạm Như Ánh at a recent shareholder meeting, Vietnam’s banking system is fundamentally experiencing a liquidity shortage. The newly appointed SBV Governor immediately summoned 46 banks to discuss measures to reduce and cool interest rates. However, Ánh noted that the market is essentially short of money, making deposit mobilization difficult for banks collectively.

The SBV reported that approximately 30 domestic commercial banks have announced deposit rate reductions since April 10, with typical adjustments of 0.1-0.5%. This list spans from major state-owned banks like Vietcombank, BIDV, and VietinBank to joint-stock banks including Techcombank, VPBank, Sacombank, and SHB. Despite these reductions, effective deposit rates remain elevated in the retail market where banks compete aggressively for deposits.

Market Context

Major Vietnamese banks listed on HOSE including Vietcombank (VCB), VietinBank (CTG), BIDV (BID), and Techcombank (TCB) have shown mixed price action recently, with VCB closing at 60 (+1.01%) on April 15, 2026, while BID closed at 40 (-0.12%) and CTG at 35 (unchanged). The banking sector faces pressure from both regulatory directives to lower rates and fundamental liquidity constraints that could affect profitability metrics. The interbank rate decline suggests some short-term liquidity relief but doesn’t fully reflect retail deposit market conditions.

Strategic Significance

The persistent liquidity shortage creates a challenging environment for Vietnamese banks to balance regulatory pressure for lower rates with competitive deposit mobilization. With the loan-to-deposit ratio rising to 112%, banks face increased funding costs that could compress net interest margins if lending rates decline faster than deposit rates. This dynamic particularly affects banks with aggressive lending growth or weaker deposit franchises, potentially widening performance divergence within the sector.

What to Watch

• Q2 2026 earnings reports from major banks for evidence of margin pressure or deposit cost trends
• Further regulatory announcements from the State Bank of Vietnam regarding interest rate policies
• Monthly credit growth and deposit growth data from the SBV
• Foreign ownership filings that might indicate institutional sentiment toward banking stocks
• Individual bank announcements regarding specific deposit rate adjustments beyond the initial April cuts