Vietnamese Banks Have Limited Room to Cut Rates as Financing Demand Mounts
At the 2027 Vietnam Investment Forum, BIDV chief economist Cấn Văn Lực said rising credit demand, pressure on bank liquidity and narrowing net interest margins limit the scope for further rate cuts. TPBank deputy CEO Nguyễn Việt Anh called for more medium- and long-term financing channels outside the banking system.
During a discussion at the 2027 Vietnam Investment Forum, BIDV chief economist Cấn Văn Lực said cutting interest rates in Vietnam is currently difficult. Rates have risen rapidly since the fourth quarter of 2025. As economic growth targets increased, the credit growth target rose from an initial range of about 15% to 16% to about 19%. He said growing demand for funds and inflationary pressure have pushed up both deposit and lending rates.
BIDV chief economist Cấn Văn Lực.（VietVance）
Cấn Văn Lực said policy rates are already relatively low, raising the question of whether banks could continue to attract funds if deposit rates were cut sharply. He suggested trying a reduction of about 0.5 percentage points in deposit rates, then observing the market’s response. The current aim is to reduce lending rates by about 1.5 to 2 percentage points, but that would put further pressure on banks’ net interest margins. He said those margins had fallen from about 3% at the end of 2025 to 2.8% in the first quarter of 2026 and now stand at about 2.5%.
TPBank deputy CEO Nguyễn Việt Anh also said Vietnam is unlikely to return to its earlier period of low-cost funding. As an example, he said that if US dollar interest rates were about 5%, adding a 2% to 3% exchange-rate premium and a bank net interest margin of about 2.5% would make it difficult for bank lending rates to fall below 10%. He said loan growth had typically exceeded deposit growth by about 2 to 3 percentage points over the past five years. In the first 10 months of 2026, credit grew by more than 11%, while deposits grew by nearly 10%.
TPBank deputy CEO Nguyễn Việt Anh.（VietVance）
Both speakers proposed easing funding pressure on the banking system. Cấn Văn Lực called for improving liquidity, accelerating public investment disbursement, moving forward with stalled projects and speeding up tax refunds. Nguyễn Việt Anh said faster disbursement of funds held in the State Treasury system would help improve liquidity but could not solve the financing problem on its own. He said the capital market also needs to be opened up in 2027 to expand medium- and long-term financing channels outside banks.
Source: VietVance
