SBV Governor: Rising Interest Rates Due to High Credit Demand, Tight Capital

Overview

State Bank of Vietnam (SBV) Governor Pham Duc An acknowledged that interest rates are under upward pressure due to strong credit demand and constrained capital mobilization, directly affecting business borrowers. The central bank is exploring measures including expanded foreign currency lending and enabling commercial banks to manage assets for corporate bond issuance. The policy stance has implications for major listed banks such as VPBank (VPB), BIDV (BID), Vietcombank (VCB), VietinBank (CTG), and TPBank (TPB).

Key Facts

• Governor Pham Duc An spoke at a government-business conference on July 18, 2026, chaired by Prime Minister Le Minh Hung.
• The SBV described interest rate management as “difficult” due to high capital demand and tight mobilization.
• Short-term deposits account for 80% of bank funding, while only 20% is medium-to-long term, creating a maturity mismatch.
• The SBV is studying expanded foreign currency lending for import-related investment purposes.
• The central bank plans to propose amendments to the Law on Credit Institutions to allow commercial banks to provide asset management services for corporate bond issuance.
• The SBV is also considering international bond issuance to mobilize external capital, coordinating with the Ministry of Finance.
• Banks have agreed to avoid competing for deposits to keep lending rates reasonable.

What Happened

At a government-business conference on July 18, 2026, SBV Governor Pham Duc An explained that interest rates have risen because the economy is focused on growth and credit expansion, leading to capital shortages that naturally push rates higher. He noted that high deposit rates translate into high lending rates, directly impacting businesses. The central bank has urged banks to refrain from competing for deposits to moderate output rates.

Governor An also outlined several policy initiatives. The SBV is studying the expansion of foreign currency lending to certain borrowers, particularly those importing for investment. Additionally, the central bank is preparing to propose legal amendments that would allow commercial banks to offer asset management services for corporate bond issuance, aiming to develop the capital market and reduce pressure on bank lending. The SBV is also coordinating with the Ministry of Finance on potential international bond issuance.

Market Context

As of July 18, 2026, major bank stocks traded at the following closing prices: VPB at VND 25,850, BID at VND 38,800, CTG at VND 32,000, and VCB at VND 58,500. All are listed on HOSE. The banking sector has been under pressure from rising interest rates and tight liquidity, with the SBV’s comments reinforcing the near-term headwinds. The sector’s performance is closely tied to credit growth and net interest margins, which are directly affected by the interest rate environment.

Strategic Significance

The SBV’s acknowledgment of persistent interest rate pressures signals that the current tight monetary conditions may persist, compressing bank net interest margins if deposit costs remain elevated. However, the proposed policy measures—expanded foreign currency lending and bank involvement in corporate bond issuance—could open new revenue streams and reduce reliance on traditional lending. For banks like VPB, BID, CTG, VCB, and TPB, the ability to manage assets for bond issuance represents a potential fee-income opportunity. The focus on medium-to-long term lending also aligns with infrastructure and corporate investment needs, which could support credit demand.

What to Watch

• SBV policy meeting minutes or further guidance on interest rate trajectory.
• Draft amendments to the Law on Credit Institutions and their timeline for approval.
• Implementation details on expanded foreign currency lending, including eligible borrowers and limits.
• Bank quarterly earnings reports for Q2 2026, particularly net interest margin trends and deposit cost data.
• Any announcement on international bond issuance by the SBV or Ministry of Finance.