Vietnam Interest Rates Under Pressure as Credit Growth Outpaces Deposits: LPB, VPB

Overview

Vietnam’s banking system is under renewed interest rate pressure as credit growth continues to outpace deposit mobilization, widening the funding gap to 2.4 percentage points in H1 2026. The State Bank of Vietnam (SBV) governor has warned that banks may be forced to raise deposit rates to attract funds, which would push up lending rates and compress net interest margins. Key lenders LPB (LPBank) and VPB (VPBank) are among those most exposed, with loan-to-deposit ratios already elevated.

Key Facts

• As of June 26, 2026, credit growth reached 7.41% year-to-date, while deposit growth was only 5.02%, a gap of 2.4 percentage points.
• The gap between total credit and deposits is estimated at VND 2.7 quadrillion, according to ACBS Securities.
• LPB’s loans grew 10% to VND 429,465 billion, while deposits rose only 8% to VND 432,535 billion, pushing its loan-to-deposit ratio to 80.1%.
• VPB’s credit expanded 24.6% to nearly VND 1.06 quadrillion, while deposits grew 22.7%, resulting in a loan-to-deposit ratio of 84.5%.
• SBV Governor Pham Duc An stated that 80% of deposits are short-term, while demand for medium- and long-term loans remains high.
• The SBV warned that if the trend continues, banks will have to raise deposit rates, leading to higher lending rates.

What Happened

According to the General Statistics Office, as of June 26, 2026, credit growth of the economy reached 7.41% compared to the end of 2025, while deposit mobilization by credit institutions increased only 5.02%. This 2.4 percentage point gap reflects a structural imbalance that is pressuring bank liquidity. The trend is particularly pronounced at banks with aggressive credit expansion, such as Techcombank, VPBank, and LPBank.

SBV Governor Pham Duc An highlighted that about 80% of mobilized funds are short-term, while corporate demand for medium- and long-term loans, especially for large-scale investment projects, remains strong. He warned that if credit continues to grow faster than deposits, banks will be compelled to raise deposit rates to attract funds, which will inevitably push up lending rates. The warning comes as the banking system faces a maturity mismatch and rising funding costs.

Market Context

LPB closed at VND 52 on July 30, 2026, down 0.95% on volume of 1 million shares, while VPB closed at VND 25, up 1.23% on volume of 3.9 million shares. Both stocks trade on HOSE. The banking sector has been under pressure in recent months as investors weigh the impact of rising interest rates on loan growth and asset quality. The widening credit-deposit gap adds to concerns about net interest margin compression, particularly for banks with high loan-to-deposit ratios like LPB and VPB.

Strategic Significance

The structural imbalance between credit and deposit growth poses a medium-term risk to bank profitability. Banks with high loan-to-deposit ratios and reliance on short-term funding are most vulnerable to rising deposit costs. LPB’s ratio of 80.1% and VPB’s 84.5% leave limited room for further credit expansion without additional funding. The SBV’s warning signals that the era of low deposit rates may be ending, which could lead to a repricing of risk across the banking sector. Banks that can attract stable, low-cost deposits or diversify funding sources will be better positioned.

What to Watch

• SBV policy rate decisions and any changes to reserve requirements or deposit rate caps.
• Q3 2026 earnings reports from LPB and VPB, particularly net interest margin and funding cost trends.
• Deposit growth data for July and August to see if the gap narrows.
• Any regulatory measures to encourage longer-term deposits or curb rapid credit growth.
• Foreign ownership limits and capital inflows that could ease funding pressures.