KBSV Forecasts Interest Rate Peak in Q2 2026, Cooling to 0.5-1% by H2

Overview

KBSV Securities forecasts Vietnamese interest rates have peaked in early Q2 2026 and will cool more clearly in the second half of 2026, with an average reduction of 0.5-1% per year. The report highlights near-term liquidity pressures but expects relief from government support measures and easing geopolitical tensions, directly affecting banking sector stocks including Nam Á Bank (NAB) and Southeast Asia Commercial Joint Stock Bank (SSB).

Key Facts

• KBSV forecasts interest rates peaked in early Q2 2026, with clearer cooling in H2 2026 averaging 0.5-1% annual reduction.
• As of Q1 2026, credit growth reached 2.15% while deposit growth was only 0.44%, with an absolute gap hitting VND 1,500 trillion by end-September 2025.
• Commercial banks’ net Loan-to-Deposit Ratio (LDR) remains high, with the Circular 22 LDR ratio nearing the 85% ceiling.
• After a meeting with the new State Bank Governor, lending rates saw temporary 50-100 basis point reductions at some banks including Agribank, NAB, and SSB.
• Government liquidity support measures include open market operations (OMO), currency swaps, and refinancing loans.
• KBSV expects lending rates to remain flat in Q2 due to high input costs, low Net Interest Margins (NIM), and rising bad debt risks.

What Happened

In an updated interest rate outlook report, KBSV Securities emphasized that after the April 9, 2026 meeting, interest rate levels in Q2 are likely to record a slight decrease from recent highs following a consensus commitment by commercial banks to reduce deposit rates by 0.5-1% annually. The report states that with the government signaling readiness to support system liquidity through OMO, currency swaps, and refinancing channels, interest rates are expected to have peaked in early Q2 and will trend downward more clearly in the second half of 2026.

However, KBSV notes that in the short term, the downward trend in interest rates remains unclear as liquidity tension issues are forecast to continue in Q2. Primary causes include credit growth significantly outpacing deposit growth, which is not expected to reverse in the short/medium term, continuing pressure on Q2 liquidity. Additionally, cash holding and trading psychology ahead of tax policy changes will make bank fundraising difficult in Q2, while complex developments in the Middle East create dual pressure on inflation and exchange rates, limiting the State Bank’s room for liquidity support.

Market Context

Nam Á Bank (NAB) and Southeast Asia Commercial Joint Stock Bank (SSB) are both listed on the Ho Chi Minh Stock Exchange (HOSE). The banking sector has faced pressure from high funding costs and liquidity constraints, reflected in subdued stock performance. As of April 10, 2026, SSB closed unchanged at VND 17,000 with volume of 2.37 million shares, indicating cautious investor sentiment amid the mixed interest rate outlook. The KBSV report provides a forward-looking framework that could influence sector valuation as the projected H2 2026 rate cooling materializes.

Strategic Significance

The forecast implies a shift in the operating environment for Vietnamese banks. If realized, the H2 2026 interest rate cooling would reduce funding cost pressures, potentially improving Net Interest Margins (NIM) that are currently low compared to previous years. This is particularly relevant for banks like NAB and SSB that have already implemented temporary lending rate cuts. The analysis suggests that government liquidity support and geopolitical stabilization are critical prerequisites for this scenario, linking bank profitability to macro policy effectiveness and external factors.

What to Watch

• Q2 2026 credit and deposit growth data to validate liquidity pressure assumptions.
• State Bank of Vietnam policy announcements regarding liquidity support measures.
• Implementation of the commercial bank consensus to reduce deposit rates by 0.5-1% annually.
• Geopolitical developments in the Middle East affecting inflation and exchange rate pressures.
• H2 2026 public investment disbursement acceleration as a liquidity source for the banking system.