Entering Q2/2026, Vietnam’s money market is showing clear signs of a new interest-rate cycle in which funding costs are likely to drop significantly.

Banking data indicate growing liquidity pressure as credit growth has recovered faster than deposit mobilization, while exchange-rate and inflation risks continue to weigh on monetary policy.

The trend places the State Bank of Vietnam (SBV) in a difficult balancing position: maintaining sufficiently low interest rates to support economic growth while also ensuring financial system stability and containing exchange-rate pressure.

One of the most notable signals in Q1/2026 was credit expansion outpacing deposit growth.

According to Q1 financial statements from 27 listed banks, 12 lenders reported declines in customer deposits compared with the end of 2025, including BIDV, MBBank, Techcombank, ACB, VIB, TPBank, SeABank, Eximbank, OCB, Nam A Bank, KienlongBank and BaoViet Bank.

The figures reflect a broader shift of capital flows toward production, business activities and alternative investment channels as the economy recovers.

At the same time, stronger credit demand has forced banks to step up deposit mobilization efforts to balance medium- and long-term funding needs.

As of April 28, total outstanding credit in Vietnam’s banking system stood at nearly VND19,500 trillion ($739.39 billion), up 4.42% from the end of 2025 and 18.26% higher than a year earlier.

Meanwhile, deposit growth has consistently lagged credit expansion, leaving Vietnam dong deposits roughly VND2,000 trillion ($75.84 billion) below total credit outstanding. The funding gap has compelled many banks to raise deposit rates to retain liquidity.

A treasury executive at a joint-stock commercial bank said competition for deposits was no longer merely a short-term issue but had become a structural challenge.

“The recovery in credit disbursement has been too rapid, forcing many banks to raise rates to maintain liquidity safety ratios,” the executive said.

Interest rates anchored at higher levels

Unlike the 2024-2025 period, when deposit rates commonly ranged between 4-6% annually, the market has now established a significantly higher funding-cost base.

For six-month deposits - currently the most competitive tenor - private joint-stock banks such as VPBank, Techcombank, HDBank and TPBank are offering rates ranging from 6.5-7.2% per year.

Meanwhile, 12-month deposit rates have risen more sharply, commonly reaching 7-7.8% at many joint-stock banks, with some smaller lenders and special deposit programs offering rates above 8%.

Even the state-owned “Big Four” banks - Vietcombank, BIDV, VietinBank and Agribank - have lifted long-term deposit rates to around 5.5-6.2%.

Analysts said the trend signals that the market has entered a phase of persistently high interest rates aimed at protecting system-wide liquidity.

Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, said current liquidity pressure stems from three simultaneous factors: recovering credit demand, USD/VND exchange-rate pressure, and capital shifting toward higher-yielding investment channels.

“In a context where credit growth exceeds deposit growth, deposit rates are unlikely to fall deeply as they did previously. The SBV will prioritize macroeconomic and exchange-rate stability over aggressive monetary easing,” Luc said at a recent financial conference.

Despite rising rates, analysts believe the likelihood of an uncontrolled “interest-rate race” similar to late 2022 remains limited.

Banks have diversified funding sources more effectively through the interbank market, long-term certificates of deposit, international bonds, and syndicated foreign loans.

At the same time, the SBV has intensified liquidity management through open market operations (OMO) to prevent localized funding shortages.

Short-term liquidity injections via OMO have helped ease overheating pressure in the interbank market while stabilizing market sentiment.

Brokerage SSI Securities said deposit rates are now approaching the peak of the current tightening cycle. The SBV’s liquidity interventions are expected to keep rates broadly stable during Q3/2026 rather than allowing further sharp increases.

Meanwhile, VNDirect Securities said there is limited room left for further policy-rate cuts due to exchange-rate and inflation risks.

If Vietnam continues lowering dong interest rates aggressively, the narrowing gap between U.S. dollar and dong rates could place additional pressure on the exchange rate and foreign capital flows.

A banking analyst at BSC Securities said current interest rates accurately reflect capital supply and demand conditions.

“The SBV can stabilize the market, but it will be difficult to push rates down significantly while credit demand remains high,” the analyst said.

Another challenge facing banks is narrowing net interest margins (NIM). While funding costs are rising rapidly, lending rates cannot increase proportionally due to pressure to support businesses and economic recovery.

As a result, many banks are having to sacrifice part of their profitability to maintain credit growth and market share.

Analysts said this is also why banks are unlikely to push deposit rates excessively high. If funding costs continue rising sharply, the banking sector’s profits could face significant pressure in the second half of the year.

Industry reports from multiple securities firms forecast that banking-sector NIMs in 2026 will continue to narrow slightly from the previous year, particularly among joint-stock banks with aggressive credit growth targets.

Overall, analysts expect Vietnam’s money market trend through the end of 2026 to remain broadly stable at elevated levels rather than decline.

In the near term, deposit rates for 6-12 month tenors are forecast to remain around 6.5-8% a year as banks rebalance funding sources following a period of rapid credit growth and slower deposit mobilization.

Toward the end of 2026, pressure could ease somewhat as alternative funding channels such as corporate bonds, international borrowing and long-term certificates of deposit expand further.

Under a scenario in which exchange-rate and inflation pressures moderate, 12-month deposit rates could decline slightly by around 0.3-0.5 percentage points by year-end.