Interest rates to edge down amid liquidity pressures

Interest rates are expected to ease gradually following policy coordination and a broad-based reduction in deposit rates, although near-term liquidity pressures may continue to constrain the pace of decline.

- By Linh Vy

KB Securities Vietnam (KBSV) on April 20 released an updated report on interest rate prospects, indicating that following the April 9 meeting between the State Bank of Vietnam (SBV) and credit institutions, interest rates in the second quarter are likely to edge down slightly from elevated levels after commercial banks committed to cutting deposit rates by 0.5-1 per cent annually.

Alongside government signals of readiness to support system liquidity through open market operations, foreign exchange swaps, and refinancing, rates are expected to have peaked in early Q2 and to trend down more clearly in the second half of 2026.

However, in the near term, KBSV said the downward trend remains unclear as liquidity pressures are expected to persist through Q2.

"The main reason is that credit growth continues to significantly outpace deposit growth and is unlikely to reverse in the short to medium term, thereby maintaining pressure on liquidity in Q2," said KBSV.

Data from the report show that by the end of Q1, credit and deposit growth reached 2.15 and 0.44 per cent, respectively. In absolute terms, as of the end of September 2025, the gap had reached approximately $60 billion. The net loan-to-deposit ratio of commercial banks remains high, nearing the regulatory ceiling of 85 per cent.