Vietnam banking sector sees higher LDR limits and rising deposit competition

The State Bank of Vietnam has issued Circular 50/2026, which increases the loan-to-deposit ratio (LDR) ceiling from 85% to 95% for commercial banks and foreign bank branches. This regulation, effective December 1, 2026, aims to support credit growth to meet economic demands. The new rules link the LDR ceiling to the implementation of liquidity coverage ratios (LCR) and net stable funding ratios (NSFR). Additionally, current demand deposit accounts (CASA) can now be treated as stable funding with a coefficient of up to 90%.

Despite the higher ceiling, concerns remain regarding the shortage of medium and long-term capital, as much of the current deposit base is short-term. MB Securities reports that as of late September, total system credit reached approximately 20.6 quadrillion VND, a 13.2% increase from the start of the year, outpacing capital mobilization. This has led to rising LDR levels across 27 banks.

In response to capital needs, several banks are aggressively competing for deposits. Some institutions are offering interest rates exceeding 9% per annum for 6-month terms, with some promotional programs potentially pushing effective returns above 10% through vouchers and bonus points. Approximately 15 banks are currently offering rates above 9% for various deposit amounts.