The credit mismatch must be addressed effectively

Vietnam is witnessing a wave of deposit rate rises.

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Phan Duy Hung, senior director and head of Financial Institutions at VIS Rating, talked with VIR's Nhue Man about how the situation will impact the banking sector.What signals do recent, broad based increases in deposit rates by many banks send about system liquidity conditions and funding pressures?

The recent wave of deposit rate hikes primarily reflects a growing mismatch between credit expansion and deposit mobilisation, the banking system's increased reliance on short term liquidity support sources such as open market operations (OMO) and State Treasury deposits and pressures that have been exacerbated by heightened global geopolitical tensions.

Since early 2025, credit growth has accelerated sharply and has significantly outpaced deposit growth. In particular, mediumand long-term lending, especially to real estate, together with a strong pickup in public investment disbursements, has driven credit demand across the banking system.

Liquidity pressures have been more pronounced among mid sized and smaller banks. Several of these banks have recorded declines in CASA deposits and have become increasingly reliant on short term interbank funding. Against this backdrop, banks have been compelled to raise deposit rates to secure stable funding.

Since October 2025, posted deposit rates have increased by roughly 90-135 basis points. In practice, however, the effective cost of funds paid by many banks to attract deposits has been significantly higher than advertised rates, with spreads reportedly approaching 200 basis points at certain points.