The move marks the end of the ultra-low interest rate environment seen through 2024-2025. Since late last year, many commercial banks have raised deposit rates across most tenors, reflecting tighter liquidity as credit growth outpaced deposit mobilization and seasonal funding demand rose toward year-end.

At large state-owned banks, 12-24 month deposit rates have edged up to around 5.2-5.3% per year, while private lenders are increasingly offering 6-7% to secure medium- and long-term funding.

Analysts said that although the pace of increases may slow after the Lunar New Year holiday, the new rate environment is likely to persist through 2026, remaining well above earlier levels.

Pham Chi Quang, head of the monetary policy department at the central bank, said pressure to ensure system liquidity tends to rise late in the year as payment needs and capital demand increase. Slower deposit growth relative to credit expansion, combined with competition from alternative investment channels, has also pushed rates higher.

Nguyen Thanh Lam, head of retail research at Maybank Investment Bank Vietnam, said the late-2025 rate hikes were clearly seasonal and that deposit rates have begun to stabilize as liquidity pressures ease.

Another supportive factor has been easing exchange-rate pressure. As of January 20, the U.S. dollar traded at around VND26,262, down from end-2025 levels, while the free-market rate also retreated from recent highs, suggesting foreign-exchange risks are under control.

Tran Hoang Son, market strategy director at VPBank Securities, said deposit rates – particularly for short tenors up to 12 months – are unlikely to fall sharply and will instead move sideways or edge higher, forming a new and higher base. State-owned banks are expected to maintain greater stability thanks to their stronger liquidity positions.

Loan rates, meanwhile, are likely to face upward pressure in 2026 as banks seek to protect net interest margins. Average lending rates are forecast at around 9-10% per year, about 0.5-1 percentage point higher than in 2023-2024.

Selective capital flows, longer-term focus

From an equity market perspective, Son said higher interest rates signal rising capital costs and more cautious liquidity conditions, dampening investor sentiment.

Short-term speculative flows have weakened noticeably, reflected in both lower trading frequency and value. Average daily market turnover stood at about VND26.86 trillion ($1.02 billion) per session in Q4/2025 and VND37.33 trillion in January 2026, roughly half the liquidity peak seen in August-September.

Historically, January has delivered the strongest average returns for Vietnam’s stock market, with a 3.7% average gain and a nearly 70% probability of rising prices over the past 16 years.

The period between the Western New Year and Lunar New Year holidays has also seen gains in 13 of those 16 years, averaging about 5%. Analysts said this seasonality could help offset some of the negative impact from higher rates.

Even so, the impact of rising rates has been uneven across sectors. As funding costs increase and liquidity tightens, capital is becoming more selective, favoring companies with strong balance sheets, stable cash flows, and resilience to interest-rate fluctuations.

Medium- and long-term investment horizons are becoming more prominent, while short-term speculation fades. This reduces the likelihood of broad-based rallies but supports differentiation by corporate quality, consistent with a consolidation phase as investors wait for new growth catalysts.

Who benefits from higher deposit rates

According to Maybank’s Lam, the clearest beneficiaries are insurance companies and cash-rich firms with low leverage and businesses less sensitive to domestic interest-rate movements.

Insurance companies typically channel funds from policyholders into safer assets such as bank deposits and bonds. As deposit rates rise, their investment income improves materially.

By the end of Q3/2025, Bao Viet Group had allocated just over VND3.6 trillion ($137 million), or 1.3% of total assets, to riskier investments such as equities. Nearly 49% of its assets, equivalent to VND132.6 trillion ($5.05 billion), were held as bank deposits, while 37.3% were invested in bonds. Some short-term deposits earned interest rates of up to 9% per year.

Similarly, PVI Insurance held an investment portfolio of more than VND17.6 trillion ($669.89 million), largely in bank deposits, while BIDV Insurance reported about 80% of its investments in deposits.

Beyond insurance, several listed companies with large cash balances are also seen as beneficiaries. Dairy producer Vinamilk held nearly VND21.5 trillion ($818.36 million) in bank deposits at the end of Q3/2025, with minimal debt. In the first nine months of the year, interest income exceeded VND1 trillion ($38.06 million), contributing more than 12% of pre-tax profit.

Another standout is VEAM (VEA), a state-controlled machinery manufacturer, which held more than VND19 trillion ($723.2 million) in bank deposits and carried negligible debt. In the first nine months of 2025, its interest income reached VND675 billion ($25.69 million), surpassing profits from core operations.

Fertiliser producers such as Phu My Fertilizer and Ca Mau Fertilizer also maintain sizable cash positions and low leverage.

Analysts cautioned, however, that persistently high interest rates could weigh on consumption and investment demand, even for cash-rich companies. For insurers, higher rates support investment income but may reduce the appeal of long-term insurance products compared with bank savings.

In an environment where interest rates are forming a new baseline, analysts said a selective investment strategy focused on companies with healthy balance sheets and stable cash flows is increasingly appropriate.

Rather than chasing short-term rallies, investors are shifting toward medium- to long-term value accumulation, particularly in firms capable of turning higher interest rates into a financial advantage.