Lenders rebalance growth for longer-term stability

Vietnam's banks are pivoting from aggressive expansion to a more cautious, balance-sheet-driven strategy, prioritising stability and asset quality over sheer growth.

- By Ha Truc

PHAM NHU ANH CEO, MB Bank

In line with the government's directives, interest rates are set to remain stable to support businesses' access to capital and sustain growth, with lending rates anchored to help improve credit quality over time.

Conversely, banks must balance funding costs and deposit mobilisation amid relatively tight liquidity conditions, which could place short-term pressure on net interest margins.

Pham Luu Hung, chief economist and head of SSI Research, told VIR that monetary policy remains proactive but constrained by structural liquidity tightness.

"The State Bank of Vietnam (SBV) has reaffirmed a flexible stance, keeping policy rates unchanged while deploying open market operations (OMO), foreign exchange intervention, and exchange-rate management to support liquidity and anchor inflation expectations, with the 2026 consumer price index target at around 4.5 per cent," he said.

Hung noted that the system-wide loan-to-deposit ratio stood at around 112 per cent at end-March, signalling persistent funding pressure. While OMO injections and higher State Treasury deposit caps have helped stabilise conditions, they have yet to ease underlying liquidity constraints.

"This reinforces a clear policy division of labour: fiscal policy drives growth, while monetary policy stabilises liquidity and inflation. Any future easing will likely be targeted and gradual, via refinancing for infrastructure and housing, selective regulatory adjustments, and responsive liquidity support rather than broad-based rate cuts," he added.

As liquidity pressures remain only partially alleviated, the need to safeguard system stability and strengthen risk management has become more pressing, particularly as the regulatory framework moves towards tighter alignment with international standards.