Credit growth slows, slips in first half of October
Credit growth across Vietnam’s banking system eased from 11.59% at the end of September to 11.44% as of October 14, indicating that lending momentum has stalled and even edged down in the short term.
Meanwhile, the State Bank of Vietnam (SBV) continues to urge banks to cut both deposit and lending rates.
Credit growth sees short-term reversal
According to information released by SBV Governor Pham Duc An at a meeting on Monday, outstanding credit to the economy reached VND20,720 trillion ($800.73 billion) as of October 14, up 11.44% from the end of 2025 and 16.73% year-on-year.
The figure was lower than the 11.59% credit growth previously reported by the SBV. Earlier in October, the central bank said system-wide outstanding credit had reached around VND20,750 trillion ($801.89 billion) as of September 30, up 11.59% from the end of 2025 and 16.69% year-on-year.
This means credit growth since the beginning of the year had fallen by around 0.15 percentage points in just the first half of October.
The development is noteworthy as Vietnam pursues an ambitious economic growth target, which is expected to drive strong demand for capital for production, business activities and investment.
Alongside the credit slowdown, pressure to cut interest rates is mounting. On October 19, the SBV held a meeting with credit institutions chaired by Governor Pham Duc An, following the issuance of Official Letter No. 9608/NHNN-CSTT on measures concerning credit institutions’ operations.
At the meeting, the governor stressed that banks must simultaneously cut operating costs, share profits and reduce funding costs to deliver meaningful lending-rate reductions. Deposit rates are a key component of funding costs; if banks continue to raise them, their room to lower lending rates will be limited.
Under the SBV’s requirements, credit institutions must initially cut listed deposit rates by at least 0.5 percentage points per year for maturities of six months or longer. They must also avoid competing to raise deposit rates in ways that create unfair competition and destabilize the money market. At the same time, banks must introduce measures to cut lending rates by 1.5-2 percentage points per year for production, business activities and priority sectors.
Notably, rate cuts are not intended to be applied uniformly. Banks must target the appropriate borrowers and extend reductions to both existing loans and new lending. The SBV also requires tighter control over credit flowing into potentially risky sectors and warns banks against lowering lending standards to pursue credit growth.
The latest directive follows several rounds of calls for lower interest rates since the beginning of the year. It also signals that regulators want to translate general instructions into more concrete action on both the funding and lending sides.
SBV has called for rate cuts six times
Since the beginning of 2026, the government and the SBV have repeatedly urged the banking system to lower interest rates. Key milestones include Directive 01/CT-NHNN issued early in the year; a meeting with 46 commercial banks on April 9; corrective and follow-up directives in May; further instructions on interest-rate support and credit in subsequent months; and the latest call on October 18. In total, the SBV has called on banks to cut interest rates six times this year.
Following the latest directive, the market has seen concrete responses in both deposit and lending rates. Among state-owned commercial banks, BIDV has launched a short-term dong lending program with rates starting at 6% per year, up to 2 percentage points below its usual rates, depending on loan maturity and sector.
Vietcombank has pledged to cut lending rates by at least 2 percentage points per year from now until the end of the year.
Agribank also launched a program on October 19 to cut lending rates by up to 2 percentage points per year, with around VND2 trillion ($77.27 million) earmarked to support customers.
Among joint-stock commercial banks, LPBank and VietBank were among the first to adjust their listed deposit rates on Monday.
LPBank cut rates by 0.5 percentage points per year for maturities of six to 12 months and by 0.6 percentage points for maturities of 13 to 18 months. Notably, it also reduced rates by 1.6-2 percentage points per year on newly disbursed short-term loans for production and business activities.
VietBank cut deposit rates by 0.5 percentage points per year for maturities of six to 36 months.
The market has also reported that ACB would adjust its deposit rate schedule from Tuesday. The specific reductions should be checked against the bank’s official rate schedule before publication.
These moves suggest that regulatory instructions are beginning to translate into concrete programs. However, the maximum reductions announced under individual programs do not mean that all customers will receive equivalent cuts in their borrowing rates.
Assessing the outlook for the remainder of 2026, brokerage VNDirect said interest rates were likely to remain relatively stable through the end of the year, with more pronounced declines from early 2027 as external pressures ease. The forecast reflects constraints from inflationary pressures, strong demand for capital and the possibility of further U.S. interest-rate increases.
Funding pressures are also making rate cuts difficult to implement evenly across the banking system. According to Bao Viet Securities (BVSC), deposit growth remains below credit growth, continuing to put pressure on banks’ funding. As a result, the SBV’s rate-cut directives may first affect preferential lending programs and listed deposit rates. For borrowing costs to decline sustainably across the broader market, however, banks will still need to improve deposit mobilization and liquidity management.
Source: Dinh Vu, Thai Ha
