SBV Eases LDR Rule: BID, VCB, CTG, AGR Gain as Interest Rates Stay High

Overview

The State Bank of Vietnam (SBV) has allowed commercial banks to count 20% of State Treasury deposits toward the loan-to-deposit ratio (LDR), a move aimed at easing liquidity pressure. The policy primarily benefits four state-owned banks: BIDV (BID), Vietcombank (VCB), VietinBank (CTG), and Agribank (AGR), which together hold over 99% of Treasury deposits. Despite the relief, experts warn that a structural maturity mismatch in the banking system will keep interest rates elevated.

Key Facts

• SBV permits banks to include 20% of State Treasury deposits in LDR calculation, effective immediately.
• BID, VCB, CTG, and AGR hold more than 99% of total State Treasury deposits, making them the primary beneficiaries.
• The policy allows these banks to potentially increase lending by tens of trillions of Vietnamese dong.
• Experts identify a long-standing maturity mismatch (short-term deposits funding long-term loans) as the core driver of high interest rates.
• The SBV is also considering replacing the LDR with a capital-to-deposit ratio (CDR) under draft amendments to Circular 22.
• On May 20, 2026, BID closed at VND 43,900 (-0.79%), VCB at VND 64,600 (+0.31%), CTG at VND 35,200 (-1.68%), and AGR at VND 14,450 (-1.70%).

What Happened

The SBV recently announced a technical adjustment to the LDR calculation, allowing banks to count 20% of State Treasury deposits as part of their deposit base. This change comes amid rising liquidity pressure and stubbornly high interest rates on both the interbank market and retail deposits. The move is seen as a temporary relief valve for the banking system, which has become increasingly reliant on Treasury cash flows.

In an interview with financial media, Mr. Vu Tuan Duy, macro expert at SHS Securities, described the underlying issue as a “silent disease” of maturity mismatch. He noted that while loan tenors have lengthened—especially in real estate and medium-to-long-term credit—deposits remain predominantly short-term (under one year). This structural imbalance, he argued, is the primary reason interest rates remain elevated despite the SBV’s intervention.

Market Context

On May 20, 2026, the four major state-owned banks showed mixed performance: BID fell 0.79% to VND 43,900, CTG dropped 1.68% to VND 35,200, AGR declined 1.70% to VND 14,450, while VCB edged up 0.31% to VND 64,600. The banking sector as a whole has faced headwinds from tight liquidity and rising funding costs. The SBV’s LDR adjustment is intended to alleviate some of that pressure, but the market’s muted reaction suggests investors see it as a partial fix rather than a solution to the deeper maturity mismatch.

Strategic Significance

The LDR adjustment provides immediate liquidity relief to the four state-owned banks, enabling them to expand lending without breaching regulatory limits. This is particularly important as credit growth targets remain ambitious. However, the policy does not address the root cause of high interest rates: the maturity mismatch that forces banks to rely on short-term funding for long-term loans. Over time, this mismatch erodes net interest margins (NIM) and makes the system sensitive to rate shocks. The SBV’s proposed shift to a CDR framework under Circular 22 could be a more structural fix, but its implementation remains uncertain.

What to Watch

• Q2 2026 earnings reports from BID, VCB, CTG, and AGR for evidence of improved NIM and loan growth.
• SBV’s next policy meeting for further adjustments to LDR or CDR regulations.
• Trends in interbank interest rates (VND LIBOR equivalent) to gauge liquidity conditions.
• Any announcements from the SBV regarding the timeline for Circular 22 amendments.
• Foreign ownership limits and capital flows into Vietnamese banking stocks.