Funding pressures are building in Việt Nam's banking system as credit growth continues to outpace deposit mobilisation, prompting lenders to offer higher effective deposit rates despite the central bank's efforts to keep borrowing costs low to support economic growth.
State Bank of Vietnam (SBV) Governor Phạm Đức Ấn said strong credit demand had made it increasingly difficult for the central bank to steer interest rates lower.
Bank staff handle Vietnamese đồng banknotes at a private bank in HCM City. The banking system is facing mounting funding pressure as credit growth continues to outpace deposit mobilisation. — VNS Photo Bồ Xuân Hiệp
"As we focus on economic growth and credit expansion, funding shortages naturally push interest rates higher. Higher deposit rates lead to higher lending rates, directly affecting production and business activities," Mr. Ấn told a recent government meeting with the business community chaired by Prime Minister Phạm Minh Chính.
The SBV had worked with commercial banks to avoid excessive competition for deposits in an effort to contain funding costs and support lending, he said.
The comments come as many banks publicly advertise deposit rates of around 5-6.5 per cent a year for six- to 12-month terms while quietly offering significantly higher returns through certificates of deposit, bonus interest rates and tailored savings products for priority customers and large depositors.
Effective annual yields of 8.5-9 per cent are available at several lenders, reflecting intensifying competition for funding as credit demand accelerates.
Outstanding credit reached more than VND19.97 quadrillion (US$759.9 billion) as of June 26, up 7.41 per cent from the end of 2025 and 18.1 per cent from a year earlier, according to the SBV. Deposits, by comparison, rose by about 5.02 per cent over the same period.
Earlier this month, Phạm Chí Quang, director of the SBV's Monetary Policy Department, said credit growth had exceeded deposit growth by an average of 3.8 percentage points a year between 2021 and 2025, pushing the banking system's loan-to-deposit ratio to around 111-112 per cent.
The gap has highlighted the banking sector's reliance on deposits to fund lending as businesses continue to depend heavily on bank credit.
Nguyễn Thanh Tùng, chairman of state-owned Vietcombank, said domestic savings alone would not be sufficient to meet Việt Nam's investment needs if the country is to achieve its economic growth target of at least 10 per cent this year.
He said banks faced structural challenges, including credit growth consistently outpacing deposit mobilisation, reliance on short-term deposits to finance longer-term loans and regulatory constraints on raising additional capital.
Governor Ấn said about 80 per cent of banking system funding came from short-term deposits, while only 20 per cent was sourced from medium- and long-term deposits.
Although the funding structure broadly matches short-term lending needs, businesses continue to require medium- and long-term financing, requiring banks to balance support for economic growth with financial stability, according to Ấn.
Measures under consideration
To ease funding constraints, the SBV is studying ways to mobilise overseas capital through international bond issuance in coordination with the Ministry of Finance based on the economy's financing needs.
The central bank is also considering expanding foreign-currency lending for eligible borrowers, including companies importing machinery and equipment for investment projects.
In addition, the SBV has proposed amendments to the Law on Credit Institutions that would allow commercial banks to provide asset management services for corporate bond issuance, aiming to strengthen capital markets and reduce the banking sector's dominant role in medium- and long-term financing.
Economists expect competition for deposits to remain strong as Việt Nam pursues rapid economic growth with bank lending continuing to serve as the economy's primary source of financing.
Cấn Văn Lực, a member of the National Financial and Monetary Policy Advisory Council, said stronger demand for funding was inevitable given the country's ambitious growth target and the banking sector's central role in financing the economy.
Banking expert Nguyễn Trí Hiếu said competition would likely remain concentrated among small and medium-sized lenders, which generally face greater liquidity pressures, adding that recent increases in effective deposit rates reflected funding needs rather than any shift in the SBV's monetary policy stance.
Analysts say a repeat of the aggressive deposit rate race seen at the end of 2022 is unlikely because system-wide liquidity remained broadly adequate and banks will be reluctant to significantly increase funding costs at the expense of profitability.
Instead, they expect competition in the second half of the year to remain focused on targeted incentives, certificates of deposit and customised savings products rather than broad increases in publicly listed deposit rates.
