Vietnamese Banks Face Liquidity and Cost Constraints on Rate Cuts
BIDV chief economist Cấn Văn Lực says low policy rates, the risk of deposit outflows and narrowing bank net interest margins make further rate cuts difficult. Banking executives also say credit growth is outpacing deposit growth, adding pressure to funding costs.
At the Vietnam Investment Forum 2027 discussion on November 12, Cấn Văn Lực, chief economist at the Bank for Investment and Development of Vietnam (BIDV), said the State Bank of Vietnam’s interest rate is currently around 4.5%, leaving limited room for further cuts. He said a sharp reduction in banks’ deposit rates could cause funds to flow out of the banking system, weakening lending capacity and affecting liquidity.
Cấn Văn Lực also said the banking system’s net interest margin has continued to narrow, from around 3% at the end of 2025 to around 2.8% in the first quarter of 2026 and around 2.5% now. Given the risks facing the economy, businesses and the financial system, he said the current margin is not particularly high and cutting rates will be difficult for banks.
Cấn Văn Lực, chief economist at the Bank for Investment and Development of Vietnam.（VietVance）
Nguyễn Việt Anh, TPBank’s deputy general director in charge of strategy and bank management, said lending rates are unlikely to fall below 10% at present. He estimated that US dollar interest rates are around 5%, rising to an effective cost of about 7% after accounting for exchange rate compensation. Adding banks’ funding costs of around 2.5% brings the total to about 9.5%. He also said credit grew by more than 11% in the first 10 months of 2026, while deposits rose by nearly 10%, leaving a gap that continues to put pressure on banks’ balance sheets.
A VnExpress survey of bank deposit rates found that annual rates commonly range from around 7.8% to 9%, up by more than 3% from the end of 2025. Some banks offer an annual rate of 9.5% with no minimum deposit, or require only 100 million to 200 million Vietnamese dong.
Banking transactions at a commercial bank.（VietVance）
Cấn Văn Lực said banks should still work to lower interest rates, but must choose appropriate reductions and sectors. He supported the State Bank of Vietnam’s aim to lower deposit rates by around 0.5 percentage points and advocated prioritizing lending rate cuts for specific sectors and borrowers. He said sustained rate cuts in 2027–2028 would also require coordinated monetary policy tools, faster disbursement of public investment funds, action on stalled projects and faster refunds of value-added tax and other taxes.
Source: VietVance
