Vietnam’s banking system is still paying up for deposits even as loan pricing stays elevated, with the State Bank of Vietnam saying average deposit rates reached as much as 8.2% a year in September while average lending rates hovered near 10.9%, a spread that underscores persistent funding pressure across the sector.
Vietnam banks face high deposit and lending rates
That matters because the gap between what banks pay savers and charge borrowers is the core driver of net interest margins, credit growth and the cost of capital in an economy that still depends heavily on bank lending. When deposit competition remains intense, banks face a tougher trade-off: protect funding and liquidity by offering higher savings yields, or preserve profitability by limiting rate increases on loans.
Sentiment Indicators
The State Bank’s monthly update showed average dong deposit rates at state-owned and joint-stock lenders ranged from 0.1%-0.2% for current accounts and deposits under one month, 4.1%-4.6% for one- to six-month terms, 6.6%-8.1% for six- to 12-month deposits, 6.2%-7.8% for 12- to 24-month terms and 7.4%-8.2% for maturities above two years. Average lending rates for new and outstanding loans were 8.4%-10.9%, while short-term dong loans for priority sectors were around 4%, in line with the central bank’s ceiling.
The report suggests funding costs remain stubbornly high even after periods of policy easing, reflecting competition for deposits and the banking system’s reliance on household savings. For borrowers, that keeps financing conditions relatively tight, especially for small and mid-sized companies that often face rates closer to the upper end of the lending range than the policy-supported priority sectors.
Reuters-style checks of commercial-bank disclosures found 14 of 20 lenders had raised average lending rates from the prior month, while six lowered them. Techcombank saw the sharpest monthly drop, down 1.06 percentage points to 10.14%; KienlongBank fell to 9.31%; Agribank to 8.42%; PGBank to 8.23%; VietinBank to 6.1%; and SCB to 5.35%.
The direction of travel is important for investors because it shows the banking sector is not moving in lockstep. Larger lenders with stronger deposit franchises and lower funding costs can afford to price loans more aggressively, while smaller or more deposit-dependent banks may need to keep rates high to defend liquidity. That divergence has implications for earnings quality, deposit mix and loan growth over the next few quarters.
For Vietnam’s broader economy, the data point to a still-cautious credit environment. Higher lending costs can dampen demand for mortgages, consumer finance and business expansion, even as policy makers want banks to support growth. At the same time, elevated deposit rates can help stabilize the dong by retaining local savings, but they also raise the hurdle for any recovery in bank profitability.
The key question now is whether lower inflation and easier market funding can pull deposit rates down without forcing banks to widen loan spreads further. If funding costs stay near current levels, margins may remain under pressure and credit growth could slow; if rates ease, the benefit would likely show up first in stronger net interest income and more competitive borrowing costs.
| Entity | Gains | Losses |
|---|---|---|
| Savers | ▲Higher deposit yields | ▼Lower real returns if inflation picks up |
| Borrowers | ▲Cheaper credit at state-priority rates | ▼Higher financing costs for most loans |
| Large banks | ▲Stronger pricing power and deposit franchises | ▼Pressure on margins if deposit competition stays intense |
| Smaller banks | ▲Lending growth if they defend market share | ▼Funding costs and profitability |
