The State Bank of Vietnam’s head office in Hanoi. Photo courtesy of Sai Gon Giai Phong (Saigon Liberation) newspaper.

Speaking at a press briefing on Q1 banking sector performance, Deputy Governor Pham Thanh Ha said monetary policy had been managed proactively and flexibly, in coordination with fiscal measures, to keep average inflation around 4.5% in 2026 and support economic growth of at least 10%.

Outstanding credit in the banking system had reached more than VND19,180 trillion ($728 billion) as of March 31, up 3.18% from the end of 2025, with strong growth in key sectors including agriculture, small and medium-sized enterprises, wholesale-retail, industrial production, and construction. The wholesale and retail sector had the largest outstanding loan balance in the entire system.

The central bank is targeting credit growth of around 15% this year, with room for adjustment depending on macroeconomic conditions.

Pham Chi Quang, head of the central bank’s monetary policy department, said interest rates in both the interbank and retail markets had shown volatility in the first quarter, prompting the regulator to step in late March.

Following a meeting chaired by the newly appointed Governor Pham Duc An with commercial banks, lenders have broadly aligned with the policy direction, he said.

Around 26 banks have already cut deposit rates across various channels, including branch transactions and online platforms, according to preliminary data.

The easing in deposit rates is expected to lower funding costs for banks, creating room to reduce lending rates and support the economy, particularly as the government targets sustained double-digit growth.

However, officials acknowledged that the policy path remains challenging amid rising inflationary pressures and global uncertainties, including geopolitical tensions in the Middle East that are affecting energy markets and supply chains.

The central bank outlined four key policy priorities. First, continuing to guide interest rates lower in a cautious manner. Second, managing credit growth flexibly to balance expansion with system safety. Third, operating the exchange rate proactively, with readiness to intervene when needed. Fourth, ensuring ample liquidity in the banking system through tools such as open market operations, refinancing, and foreign exchange swaps.

Quang emphasized that maintaining system liquidity remains the top priority to ensure stable capital flows to the economy.

Vietnam’s credit growth reached over 19% in 2025 - the highest in about 15 years - pushing the credit-to-GDP ratio to around 146%, highlighting both strong capital supply and potential financial stability risks if not properly managed.

Despite external headwinds, the central bank said it still has sufficient policy space to achieve its dual objectives of controlling inflation, maintaining macroeconomic stability, and supporting growth.