SBV Governor Orders Lending Rate Cuts on Existing Loans; BIDV, VCB Lead Response

Overview

State Bank of Vietnam (SBV) Governor Phạm Đức Ấn chaired a meeting with credit institutions on 19 October and directed banks to reduce lending rates on both existing outstanding loans and new disbursements, prioritizing production and business sectors. The instruction follows a sustained rise in the national rate floor, with average lending rates at 10.7% in August and floating-rate legacy loans running at 12-14% per year. BIDV (BID, HOSE) responded with a preferential credit package starting at 6% per year, while Vietcombank (VCB) and Agribank committed to cuts of up to 2 percentage points.

Key Facts

• Average lending rate reached 10.7% in August, up 0.2 percentage points month-on-month and roughly 3 percentage points higher than a year earlier, per SBV data.
• Floating-rate legacy loans are currently priced at 12-14% per year, according to the article.
• Banks were instructed on 18 October to cut deposit rates by at least 0.5 percentage points for tenors of six months and above.
• BIDV announced a package with rates from 6% per year, up to 2 percentage points below its standard rate, for short-term dong loans in priority sectors.
• Vietcombank Chairman Nguyễn Thanh Tùng committed to a minimum 2 percentage point lending rate cut through year-end.
• Agribank cut lending rates by up to 2 percentage points effective 19 October; Sacombank announced a VND 40,000 billion package with 2 percentage point reductions.
• BVBank, LPBank and Vietbank published new deposit schedules on 19 October, cutting 0.5 percentage points on tenors of six months or more and bringing listed rates below 7% per year.

What Happened

Speaking at a meeting with credit institutions on 19 October, Governor Phạm Đức Ấn said rate reductions should not be applied uniformly but targeted at the right borrowers, with priority for production and business and other designated sectors. He said the policy should cover both existing outstanding balances and new loans, so that operating companies can reduce their financial burden while capital demand for production is supported. The directive was issued against a backdrop of persistently elevated rates: SBV data show the average lending rate rose to 10.7% in August, and floating-rate legacy loans are running at 12-14% per year.

To make the cuts substantive, the Governor asked credit institutions to trim operating costs, share profit and lower funding costs. At the 18 October directive, banks were required to cut deposit rates by at least 0.5 percentage points for tenors of six months and above. The same day, BVBank, LPBank and Vietbank published revised deposit schedules bringing listed rates below 7% per year. On the lending side, BIDV announced a package from 6% per year for short-term dong loans in priority sectors, Vietcombank Chairman Nguyễn Thanh Tùng pledged a minimum 2 percentage point cut through year-end, Agribank applied cuts of up to 2 percentage points from 19 October, and Sacombank launched a VND 40,000 billion corporate package with 2 percentage point reductions. The SBV said it will monitor deposit and lending rate movements and rate disclosures on bank websites, and will step up inspection and enforcement.

Market Context

BID closed at VND 33,650 on 19 October, with VCB at VND 56,200, LPB at VND 38,450 and STB at VND 61,800. All four are listed on HOSE and sit in the banking sector, which carries the largest weight in the VN-Index and is the primary transmission channel for SBV policy. The directive arrives after a period in which deposit competition pushed listed rates to 7.6-7.8% per year and preferential deposit rates at several banks to 8.5-9.5%, compressing margins and lifting funding costs across the system. The article does not provide intraday price reactions for the four tickers.

Strategic Significance

For long-term investors, the key question is whether directed rate cuts compress net interest margins or are absorbed through cheaper funding. The instruction to cut deposit rates alongside lending rates, and to trim operating costs and share profit, signals that the SBV intends the adjustment to come out of bank margins rather than out of depositor returns alone. Applying cuts to existing floating-rate balances is the more consequential element: it transmits relief directly to corporate borrowers and could support credit demand and asset quality, but it also reprices a book of loans that was underwritten at higher rates. State-owned lenders such as BID and VCB carry the largest corporate loan books and the clearest policy mandate, making them the first movers; private banks including LPB and STB face a margin trade-off with less direct policy obligation.

What to Watch

• Monthly SBV data on average lending and deposit rates, particularly whether the August 10.7% lending figure declines in September and October prints.
• Third-quarter earnings releases from BID, VCB, LPB and STB, focused on net interest margin guidance and funding cost trends.
• Whether other banks follow BIDV’s 6% package and disclose the share of existing floating-rate loans actually repriced.
• SBV inspection findings and any enforcement actions against banks that do not pass through the required cuts.
• Deposit rate schedules for November, to confirm listed rates hold below 7% per year after the 0.5 percentage point reduction.