Vietnam SBV cuts State Treasury deposit deduction to 50% in LDR, effective Aug 1

Overview

The State Bank of Vietnam (SBV) has issued Decision 1743/QD-NHNN, effective from August 1, 2026, to July 31, 2028, reducing the deduction rate for State Treasury term deposits in the loan-to-deposit ratio (LDR) calculation from 80% to 50%. This regulatory adjustment is designed to ease credit growth constraints for commercial banks, particularly the Big4 state-owned banks, which hold the vast majority of State Treasury deposits.

Key Facts

• Decision 1743/QD-NHNN was issued on July 30, 2026, and takes effect from August 1, 2026, through July 31, 2028.
• The deduction rate for State Treasury term deposits in LDR calculation is reduced from 80% to 50%.
• As of end-March 2026, State Treasury deposits at banks totaled VND 626,716 billion, with Big4 banks holding VND 624,167 billion (99.59% of total).
• At March 31, 2026, LDR ratios for VietinBank, BIDV, Vietcombank, and Agribank were 83.48%, 82.94%, 84.54%, and 83.28%, respectively, near the 85% cap.
• The decision aligns with Government Resolution 168/NQ-CP (June 27, 2026) targeting GDP growth of 10% or more for 2026.
• Banks must monitor and control maturity and scale mismatches between mobilized funds and usage, ensuring liquidity even if State Treasury withdraws deposits early.

What Happened

On July 30, 2026, the State Bank of Vietnam issued Decision 1743/QD-NHNN, which sets the deduction rate for State Treasury term deposits in the LDR calculation at 50% of the outstanding balance. This replaces the previous 80% deduction rate, effectively allowing banks to count a larger portion of these deposits as part of their total deposits when calculating LDR. The decision is based on point a(iii), Clause 4, Article 20 of Circular 22/2019/TT-NHNN, as amended by Circular 25/2026/TT-NHNN.

The SBV has instructed commercial banks receiving State Treasury deposits to proactively monitor and control the gap between mobilized funds and usage, ensuring liquidity and compliance with safety ratios. The move comes as the government pushes for higher economic growth under Resolution 168/NQ-CP, which targets GDP growth of at least 10% for 2026. By easing the LDR constraint, banks can expand credit without significantly increasing funding costs.

Market Context

Vietcombank (VCB) closed at VND 59,300 on July 31, 2026, on the HOSE. The banking sector has seen strong profit growth in the first half of 2026, with several banks reporting significant earnings increases. The LDR ratios of Big4 banks are near the 85% regulatory cap, limiting their ability to extend new loans. This policy change provides immediate headroom for credit expansion, particularly for state-owned banks, which are key to government-directed lending for infrastructure and economic stimulus.

Strategic Significance

The reduction in the deduction rate is a targeted measure to support credit growth without loosening overall prudential standards. For long-term investors, this enhances the growth potential of Big4 banks like VCB, BID, and CTG, which have been constrained by LDR limits. It also signals the SBV’s willingness to use technical adjustments to achieve macroeconomic targets, potentially improving the operating environment for banks. However, the benefit is concentrated in state-owned banks, as they hold nearly all State Treasury deposits, giving them a competitive edge in credit expansion.

What to Watch

• Q2 2026 earnings reports from VCB, BID, CTG, and other banks, due in August, to assess credit growth and margin trends.
• SBV’s next policy moves, including any adjustments to credit growth quotas or interest rates.
• Changes in State Treasury deposit balances, as a reduction could diminish the benefit of this decision.
• LDR ratios of Big4 banks in the coming months to see if they approach or exceed the 85% cap.
• Any further amendments to Circular 22/2019/TT-NHNN that could affect LDR calculation.