Vietnam commercial banks agree to lower interest rates

Vietnam’s commercial banks reached a strong consensus on efforts to reduce interest rates to support the economy at a meeting held by the State Bank of Vietnam (SBV) on Thursday.

The meeting, which saw the participation of 46 commercial banks, took place amid a recent sharp upward trend in market interest rates, posing challenges to the goal of supporting economic growth.

According to a report presented at the meeting by the SBV’s monetary policy department, in the first three months of 2026, the central bank proactively and flexibly managed monetary policy in line with international and domestic market developments.

Tools such as open market operations (OMO) were used effectively, with daily purchases of valuable papers across various maturities, thereby supporting system liquidity and stabilizing the money market.

At the same time, exchange rates and the foreign exchange market were managed flexibly, with coordinated policy tools to absorb external shocks, contributing to macroeconomic stability and inflation control.

In terms of credit, the SBV set a credit growth target of around 15% for the entire system, while requiring credit institutions to strictly control capital flows into potentially risky sectors like real estate and prioritize lending to production, business activities, and key growth drivers.

By the end of March 2026, total outstanding credit in the system had increased by about 2.65% to over VND19,080 trillion ($724.55 billion). This represents a relatively positive growth rate amid rising demand for capital in the economy.

Despite these positive outcomes, the SBV acknowledged significant recent challenges. Complex international developments, particularly geopolitical tensions in the Middle East, have driven up oil prices, thereby increasing global inflationary pressures.

Domestically, strong demand for capital to support economic growth has intensified pressure on interest rates. In reality, both deposit and lending rates at many banks have shown an upward trend, increasing capital costs for businesses.

In this context, maintaining reasonable interest rate levels has become a difficult task, requiring close coordination between the regulator and the commercial banking system.

At the meeting, commercial banks expressed strong consensus in implementing the policies of the Government, the Prime Minister and the SBV to lower interest rates in support of businesses and citizens. Accordingly, they committed to reducing both deposit and lending interest rates following the meeting.

This move is expected to help lower capital costs for businesses, promote production and business activities, and support economic recovery amid ongoing difficulties in many sectors.

In his concluding remarks, the SBV's new Governor Pham Duc An emphasized that the central bank will continue to closely monitor developments in deposit and lending rates, as well as the disclosure of lending rates on banks’ websites. It will implement appropriate monetary policy measures and stand ready to provide liquidity support to commercial banks.

In parallel, the SBV will strengthen inspection, supervision, and oversight of banks’ compliance with directives from the Government, the Prime Minister and the SBV regarding deposit and lending interest rates, and will strictly handle violations in capital mobilization and credit provision activities by commercial banks.

Vietnam’s central bank targets credit growth of around 15% this year, lower than both its target of 16% and the actual expansion of 19.1% recorded last year. Outstanding loans in 2025 hit VND18,580 trillion ($707.14 billion).