SBV Deposit Rate Cut Lifts VN-Index 4% in Strongest Week of 2026

Overview

A State Bank of Vietnam directive requiring commercial banks to cut average deposit rates by at least 0.5 percentage points a year has helped drive the VN-Index up roughly 4% in its strongest week since the start of 2026, according to a strategy note from MB Securities (MBS). Vietcombank (VCB), Sacombank (STB) and HDBank (HDB) are among the large lenders that have already lowered funding costs, making the funding-rate channel the central variable for bank earnings and for the broader market into year-end.

Key Facts

• Circular 9736/NHNN-CSTT requires commercial banks to cut average deposit rates on tenors of six months or more by at least 0.5%/year in the final months of 2026.
• Banks that do not comply may face lower or reduced credit growth quotas, per the directive.
• Vietcombank, Agribank, Sacombank and HDBank have cut deposit rates and launched preferential lending packages with loan-rate reductions of about 1.5-2%/year, and up to 3% for some near-term priority sectors.
• At an October 23 conference hosted by the SBV and the Hồ Chí Minh City People’s Committee, major banks signed 20 agreements worth about VND 230,000B for transport, industrial, energy and social housing projects in the Southeast region.
• Public investment disbursement reached about VND 660,740B as of October 15, 2026, equal to 64.6% of the Prime Minister’s plan, with Hà Nội at VND 118,200B and Hồ Chí Minh City at VND 105,000B.
• Q3 results are in for 465 of 1,519 listed companies, about 24.6% of total market capitalization, with aggregate after-tax profit up 32.7% year-on-year.
• Export turnover reached USD 29.25B in the first half of October, up 12.41%, with a trade surplus of about USD 1.82B.

What Happened

MBS published a strategy report arguing that the signal of “peak interest rates, bottoming equities” is adding support to domestic cash flows. The report cites the SBV’s Circular 9736/NHNN-CSTT, which instructs commercial banks to reduce average deposit rates on tenors of six months or more by a minimum of 0.5 percentage points a year in the closing months of 2026, with non-compliant banks exposed to lower credit growth allocations. The note states that large lenders including Vietcombank, Agribank, Sacombank and HDBank have since lowered deposit rates and rolled out preferential credit packages.

The report also points to credit being channelled into large projects. At an October 23 conference organised by the SBV and the Hồ Chí Minh City People’s Committee, major banks signed 20 agreements to supply roughly VND 230,000B for transport, industrial, energy and social housing projects in the Southeast region. MBS separately flagged accelerating public investment disbursement, with about VND 660,740B, or 64.6% of the Prime Minister’s target, disbursed as of October 15, 2026. On the earnings side, the brokerage said 465 of 1,519 listed companies, representing 24.6% of market capitalization, have reported or pre-announced Q3 figures, with aggregate after-tax profit up 32.7% year-on-year, though results are highly divergent across sectors.

Market Context

On HOSE, VCB closed at 57 on October 26, down 0.18% on volume of 1,067,900 shares, while STB closed at 68, down 0.88% on 699,100 shares, and HDB closed at 22, down 1.11% on 4,268,500 shares. The muted single-session moves contrast with the roughly 4% weekly gain in the VN-Index reported by MBS, which ended a four-week losing streak and reversed the index’s typical October weakness despite global selling in AI-related equities and Brent crude near USD 117 a barrel. The divergence suggests the index-level rally has not yet translated into uniform bank-sector performance.

Strategic Significance

The policy matters most for net interest margins. A mandated 0.5 percentage point cut in deposit costs lowers funding costs across the system, but the benefit accrues unevenly: lenders with large low-cost current and savings account bases, such as Vietcombank, have less room to reprice downward, while those funding more heavily from term deposits, including STB and HDB, stand to gain more if lending yields hold. The explicit link between compliance and credit growth quotas gives the SBV a direct lever over balance-sheet expansion, effectively trading margin relief for adherence to the rate directive. Combined with VND 230,000B of new project credit agreements and public investment disbursement at 64.6% of plan, the policy aims to transmit lower rates into infrastructure and property lending rather than let them sit in deposits.

What to Watch

• Q3 earnings releases from VCB, STB and HDB, including net interest margin and deposit-cost disclosure, through the remainder of the reporting season.
• SBV credit growth quota allocations for the fourth quarter and any enforcement action against non-compliant banks.
• Public investment disbursement data for the full-year 2026 target, with the next monthly update expected in early November.
• National Assembly progress on the draft amended Law on Housing, comprising 13 chapters and 130 articles, and its treatment of speculation and land subdivision.
• Weekly foreign-investor flows and VN-Index volume to test whether the 1,700-1,720 support zone identified by MBS holds.