SBV Orders Banks to Cut Deposit Rates 0.5% and Lending Rates 1.5-2%

Overview

The State Bank of Vietnam (SBV) met with credit institutions on 19 October and directed them to cut deposit rates by at least 0.5%/year on tenors of six months and above, and lending rates by 1.5-2%/year for production, business and priority sectors. The instruction follows Văn bản số 608 issued on 18 October. BIDV (HOSE: BID) has begun offering loans from 6%/year and Vietcombank (HOSE: VCB) has committed to a lending-rate reduction of at least 2% through year-end, making the directive immediately relevant to listed bank earnings.

Key Facts

• SBV requires a minimum 0.5%/year cut to deposit rates on tenors of six months or longer.
• Lending rates for production, business and priority sectors are to fall 1.5-2%/year.
• The directive was issued as Văn bản số 608 on 18 October; the SBV meeting with credit institutions followed on 19 October.
• Governor Phạm Đức Ấn chaired the meeting and framed the cuts as immediate and tied to system safety requirements.
• BIDV is deploying a lending programme with rates from 6%/year.
• Vietcombank committed to cutting lending rates by at least 2% between now and year-end.
• In the week of 12-16 October, the SBV reversed to net injection of VND 8,188 billion into the banking system.

What Happened

According to the SBV’s announcement, Governor Phạm Đức Ấn told credit institutions at the 19 October meeting that banks must reduce lending rates by 1.5-2%/year for production, business and priority sectors, alongside a minimum 0.5%/year reduction in deposit rates for tenors of six months or more. The requirement is linked to maintaining system safety, and follows Văn bản số 608 dated 18 October. The government has separately pressed for lower capital costs and for credit to be channelled toward production and business activity in support of enterprises and households.

Implementation has started at the largest state-owned banks. BIDV has launched a lending programme priced from 6%/year, while Vietcombank has committed to reducing lending rates by at least 2% from now until the end of the year. The article does not specify the funding cost assumptions behind BIDV’s 6%/year floor, nor the product segments covered by either bank’s programme.

Market Context

BID closed at VND 33,650 on 19 October, VCB at VND 56,200, ACB at VND 20,250 and TCB at VND 33,250, with all four listed on HOSE. The directive lands as market liquidity has thinned: average daily turnover on the HOSE and HNX fell below VND 14,000 billion per session in the 12-16 October week, with money rotating out of retail, oil and gas and securities names. The SBV’s net injection of VND 8,188 billion in the same week signals a liquidity stance that partially offsets the margin pressure implied by forced lending-rate cuts.

Strategic Significance

The policy compresses net interest margins across the listed banking sector, but not uniformly. Banks with strong low-cost current and savings account deposits, led by VCB and BID, can absorb a 0.5%/year deposit-rate cut while still repricing lending down 1.5-2%/year, whereas banks more reliant on term deposits face a tighter squeeze. The explicit link to system safety and priority-sector credit suggests the SBV is trading near-term bank profitability for credit growth into production, a trade that historically supports asset quality more than it supports margins. For long-term holders, the key variable is whether deposit repricing happens fast enough to protect spreads, and whether the directive is a one-off adjustment or the start of a sustained lower-rate regime.

What to Watch

• Q3 2026 earnings releases from BID, VCB, ACB and TCB, and any net interest margin guidance for Q4.
• Monthly SBV credit growth and deposit-rate statistics confirming whether the 0.5%/year floor is met across the system.
• Further open-market operations and SBV bill issuance for signals on interbank liquidity.
• Disclosure of the product scope and duration of BIDV’s 6%/year lending programme and Vietcombank’s 2% commitment.
• Any follow-up SBV directive extending the rate cuts beyond priority sectors.