SBV Circular 25: VND 1 Quadrillion Credit Boost for Vietnam Economy

Overview

The State Bank of Vietnam (SBV) issued Circular 25 on June 22, effective July 1, raising the cap on short-term funds used for medium- and long-term loans from 30% to 40% and allowing 20% of Treasury deposits to count as mobilized capital. This policy shift is expected to inject approximately VND 1 quadrillion (about USD 40 billion) into the economy, benefiting major banks such as BID, VCB, and CTG, as well as sectors reliant on long-term capital like real estate, renewable energy, and infrastructure.

Key Facts

• Circular 25 raises the short-term funding cap for medium/long-term loans (SMLR) from 30% to 40%, reversing a previous tightening trend.
• The regulation allows 20% of time deposits from the State Treasury to be counted as mobilized capital for liquidity ratio calculations.
• Treasury deposits at Vietcombank (VCB), BIDV (BID), and VietinBank (CTG) total VND 563 trillion; the 20% inclusion creates theoretical credit headroom of about VND 31.5 trillion per bank.
• VCBS estimates the banking system’s medium/long-term loan ratio could return to 48-49% (from 46% in 2025), implying credit growth of 23% in 2026.
• The total potential credit injection is estimated at VND 1 quadrillion (USD 40 billion), supporting sectors with long payback cycles: real estate, renewable energy, public investment, and industrial infrastructure.
• The policy signals a shift from tightening to easing, with system-wide credit growth expected to reach 17%.

What Happened

On June 22, the State Bank of Vietnam issued Circular 25, which takes effect on July 1. The circular raises the maximum ratio of short-term funds used for medium- and long-term loans from 30% to 40% for banks and foreign bank branches. It also permits 20% of time deposits from the State Treasury to be included in mobilized capital when calculating safety ratios.

According to expert Tran Trong Duc, CEO of Virtus Prosperity, Treasury deposits at Vietcombank, BIDV, and VietinBank amount to VND 563 trillion. Including 20% of these deposits creates theoretical credit headroom of about VND 31.5 trillion for each bank. Combined with the SMLR cap increase, the circular eases liquidity constraints that had pushed leading banks close to safety limits as early as Q1 2026.

Market Context

On June 24, BID closed at VND 42,100 (-1.29%), CTG at VND 33,900 (-0.29%), and VCB at VND 61,000 (-0.49%). All three are listed on HOSE and are among the largest banks by assets. The banking sector has faced margin pressure from tight liquidity and slowing credit growth. Circular 25 directly addresses these constraints by expanding lending capacity, which is expected to improve net interest margins and support earnings growth in coming quarters.

Strategic Significance

Circular 25 represents a clear policy pivot from monetary tightening to easing, providing banks with greater flexibility to finance long-term projects. For BID, VCB, and CTG, the ability to use Treasury deposits as capital and the higher SMLR cap will unlock significant credit headroom, particularly for infrastructure and real estate loans. This supports the government’s growth targets and could drive a multi-year credit cycle. Indirect beneficiaries include real estate developers, renewable energy firms, and construction companies that rely on bank financing for capital-intensive projects.

What to Watch

• Q3 2026 earnings reports from BID, VCB, and CTG for evidence of credit growth acceleration and margin improvement.
• SBV’s next monetary policy meeting for any further easing measures or adjustments to credit growth targets.
• Loan disbursement data for real estate and infrastructure sectors in H2 2026.
• Foreign ownership limits and any changes to banking sector caps that could affect institutional flows.
• Updates on Treasury deposit balances and their utilization by banks.