Fuelling credit growth and easing rate pressures

Circular 50/2026/TT-NHNN introduces two critical adjustments: it officially retains the Loan-to-Deposit Ratio (LDR) while raising the cap from 85% to 95%, alongside a broader definition of funding sources. Furthermore, the implementation roadmap for the Liquidity Coverage Ratio (LCR) has been extended compared to earlier exposure drafts, while the Net Stable Funding Ratio (NSFR) remains targeted for 2028. This incentive-driven framework encourages banks to bolster liquidity risk management, aligning with broader policy goals to expand credit during a major national investment cycle.

According to Ms. Ha Thu Hien, an analyst at VPBank Securities (VPBankS), opting for the LDR over the Credit-to-Deposit Ratio (CDR) originally proposed in the draft helps relieve capital structure pressures and supports credit growth.

"Raising the LDR ceiling to 95%, and factoring foreign borrowings and equity into the denominator, gives banks substantial leeway for healthy credit growth without triggering short-term deposit liquidity shocks," Ms. Hien noted. "However, because the new formula excludes corporate bond investments and other credit extensions, the net benefits will vary depending on individual balance sheet structures."

Echoing this view, Mr. Nguyen Minh Tuan, CEO of AFA Capital, explained that under a 95% LDR cap, a bank can lend out 95 VND for every 100 VND raised. This shift significantly alleviates fundraising pressure across the banking system. Consequently, lenders will no longer need to engage in aggressive deposit wars or drive up retail interest rates, as seen in recent months.

"This is a highly agile intervention designed to anchor interest rates," Mr. Tuan observed. "It is particularly timely given that Q4 is traditionally a tight period for liquidity, with rates often spiking aggressively in October and November."

Which lenders stand to gain?

Mr. Tuan also highlighted that Circular 50/2026/TT-NHNN introduces two new metrics: 30-day liquidity solvency and funding stability. Effective 1 December 2026, these provisions allow eligible banks to register for early adoption. He noted that Vietnam’s governance framework is rapidly aligning with international standards. Regional peers across Malaysia, Thailand, Indonesia, and the Philippines have long implemented these liquidity standards, and Vietnam is now following suit. Fourth-quarter policy impacts are becoming increasingly clear, demonstrating the SBV’s proactive and highly flexible monetary stance.

"With external headwinds such as inflation and volatile oil prices, targeted easing is essential. It prevents banks from hiking deposit rates while maintaining a steady flow of capital into the economy to support the 10% GDP growth target," Mr. Tuan emphasized.

For the banks themselves, this regulation offers immediate relief by dampening aggressive deposit competition and easing maturity mismatch pressures to safeguard Net Interest Margins (NIM) amid rising Costs of Funds (COF). Over the long term, however, it introduces a tighter discipline: the SBV is pushing lenders toward comprehensive capital management. The LCR and NSFR frameworks will compel institutions to restructure their assets. Banks with strong equity buffers, stable retail deposit bases, and robust long-term funding capabilities are best positioned to outperform.

Preliminary data reviewed by Mr. Ngo The Hien, Deputy Head of Research at SHS, paints an optimistic picture. Most listed banks are well-equipped to apply for early LCR and NSFR adoption ahead of the 1 October 2028 deadline, as current ratios comfortably exceed minimum requirements (LCR above 50% and NSFR above 90%). Proactive early adoption will grant these banks access to the raised 95% LDR cap, creating additional capacity to scale up lending in support of economic recovery.

Based on Q2 financial data, recalculating the LDR under the new formula reveals a clear divergence in impact. ACB and MBB stand to gain the most, followed by moderate increases for HDBank, VPBank, and BIDV, while Vietcombank and VietinBank will see smaller incremental gains. Overall, state-owned lenders (Vietcombank, VietinBank, BIDV) are set to reap solid net gains. Among private joint-stock banks, VPBank appears to be the primary beneficiary of the 95% LDR ceiling, with HDBank also well-positioned to capitalize on the new rules.

"The decision to transition to the new ratios ultimately rests on each bank's corporate strategy," experts noted. "Lenders that prioritize liquidity risk management, capital buffer expansion, reduced interbank dependency, and maturity mismatch mitigation, moving toward genuine Basel III compliance, will thrive in this new era of competition, where stable funding takes precedence over aggressive credit expansion."