SBV Raises Short-Term Loan Cap to 40%: BID, VCB, TCB, MBB, STB, ACB, VPB Impact

Overview

The State Bank of Vietnam (SBV) issued Circular 25, effective July 1, raising the maximum ratio of short-term funds used for medium- and long-term loans (SMLR) from 30% to 40% for all banks. According to Vietcombank Securities (VCBS), this could unlock approximately 1 quadrillion VND in additional credit capacity, benefiting mid-sized banks and sectors with long investment cycles such as real estate, renewable energy, and public infrastructure.

Key Facts

• SBV Circular 25 raises the SMLR cap from 30% to 40%, effective July 1.
• VCBS estimates the change could unlock about 1 quadrillion VND in medium/long-term lending capacity.
• The previous reduction from 40% to 30% took effect in early 2023 to limit maturity mismatch risk.
• State-owned banks (BIDV, Vietcombank, Vietinbank) maintain SMLR ratios of 20-25%, well below the new cap.
• Large private banks (Techcombank, MB, Sacombank, ACB, VPBank) have SMLR ratios around 24-27%.
• The new rule is a temporary measure before Basel III’s Net Stable Funding Ratio (NSFR) becomes mandatory: minimum 90% from 2028, 100% from 2030.
• VCBS expects industry credit growth to reach 17% per year, with medium/long-term loan share rising to 48-49% from 46%.

What Happened

On July 1, the State Bank of Vietnam’s Circular 25 took effect, raising the maximum proportion of short-term deposits that banks can use for medium- and long-term loans from 30% to 40%. This reverses the tightening implemented in early 2023, when the ratio was cut from 40% to 30% to curb maturity mismatch risks.

VCBS, a securities affiliate of Vietcombank, assessed that the move is not a step back in risk management but a calculated easing to support the economy. It provides banks time and space to accumulate resources before the stricter Basel III standards kick in. From 2028, banks must comply with the Net Stable Funding Ratio (NSFR), starting at 90% and reaching 100% by 2030, replacing the current SMLR rule.

Market Context

On the announcement date (June 30, 2026), BID closed at VND 42,400 (flat), VCB at VND 62,200 (+0.32%), TCB at VND 33,500 (-0.89%), and MBB at VND 25,200 (+0.40%). The policy is broadly positive for the banking sector, particularly mid-sized banks that have less access to long-term deposits. State-owned banks like BID and VCB, with SMLR ratios already below 25%, have less immediate room to expand but benefit from improved liquidity and lower funding costs. The policy also supports credit growth in real estate, energy, and infrastructure, which are key drivers of Vietnam’s economy.

Strategic Significance

The SMLR relaxation signals the SBV’s priority on economic growth over short-term risk reduction, especially as the property sector and public investment need funding. For mid-sized banks, the ability to use more short-term funds for longer-term loans directly expands their lending capacity and improves net interest margins (NIM) by reducing reliance on expensive long-term deposits or subordinated bonds. For large state-owned banks, the benefit is more indirect: they gain flexibility to finance large infrastructure projects without straining their liquidity. The policy also sets the stage for the eventual transition to Basel III, giving banks a multi-year runway to adjust their funding structures.

What to Watch

• Q3 2026 earnings reports from mid-sized banks (STB, ACB, VPB) for signs of accelerated loan growth and NIM expansion.
• SBV’s next monetary policy meeting for any further easing or tightening signals.
• Credit growth data for real estate and infrastructure sectors in the coming months.
• Banks’ NSFR disclosures and progress toward Basel III compliance by 2028.
• Any potential adjustment to the SMLR cap if inflation or asset quality risks emerge.