Maintaining Interest Rate Stability: Strategies and Challenges

Deposit interest rates have inched up, and liquidity among credit institutions is showing signs of strain. However, lending rates are expected to remain stable, supporting economic growth.

Since the beginning of December, the upward trend in deposit interest rates has continued across many commercial banks, with increases of approximately 0.3–0.7 percentage points compared to the previous month. Nevertheless, the requirement to maintain stable lending rates to support economic growth has forced banks to calculate cost savings and narrow their net interest margins (NIMs).

Overnight lending rates also rise

According to reports from *Báo Người Lao Động*, not only have interest rates risen in the market between commercial banks and the public, but also in the interbank market—where commercial banks lend to each other—rates have increased significantly. The latest data from the State Bank of Vietnam shows that the overnight interbank lending rate has risen to 7.37%; the one-week rate is at 7.09%; and the two-week lending rate has reached 7.35%…

Mr. Nguyễn Thế Minh, Director of Retail Customer Analysis at Yuanta Vietnam Securities Company, noted that despite banks continuously supporting liquidity through open market operations (OMO), the high interbank rates across various tenors indicate that the system’s payments are under pressure. In reality, credit demand has surged at year-end, with the latest data showing a 16.56% increase in credit to the economy as of November 27 compared to the end of last year, while deposit growth has not kept pace. “This situation forces banks to raise input interest rates to mobilize more capital for lending. The upward trend in deposit rates has also spread to some state-owned commercial banks, reflecting liquidity pressures that are no longer confined to smaller banks as in previous periods. On the lending side, interest rates have shown signs of increasing in some banks, particularly for real estate loans,” said Mr. Thế Minh.

As reported by *Báo Người Lao Động*, some commercial banks have recently suspended preferential loan packages for young homebuyers or adjusted lending rates upward to offset increased input costs. However, production and business lending rates remain low.

Dr. Hồ Sỹ Hòa, Director of Research and Investment Advisory at DNSE Securities Company, noted that the rebound in deposit interest rates is due to several factors, most notably the fact that credit growth is outpacing deposit growth. Credit has grown by about 16%, while deposits have only increased by around 11%, narrowing the gap between the two metrics and putting significant pressure on the banking system’s liquidity. This has forced banks to raise rates to attract more deposits. Additionally, seasonal year-end factors have increased capital demand beyond usual levels.

Another notable factor, according to DNSE experts, is the upcoming implementation of public investment for the 2026–2030 period, which requires substantial capital. To successfully mobilize funds, newly issued government bond rates are trending upward. Similarly, corporate bond rates have also risen, adding pressure to increase deposit rates within the banking system. The recent increase in OMO rates indicates additional pressure on short-term interest rates. “Rising rates directly impact businesses’ capital costs, making investors more cautious. The market needs time to assess whether the interest rate pressure is short-term due to seasonal factors and public investment demand or will become a prolonged trend. This will influence the shift of funds between investment channels,” said Dr. Hồ Sỹ Hòa.

Commercial banks “straining”

Some experts believe that in the coming weeks, the regulatory authority may maintain net injection operations to support liquidity amid high year-end capital demand. Economist Dr. Huỳnh Trung Minh analyzed that credit is growing at 15–16% annually, while household deposits are increasing by less than 10%. The consequence of this imbalance is that the loan-to-deposit ratio across the system has risen to a high level. The VNĐ/USD exchange rate remains under pressure during the year-end peak season, forcing the State Bank to absorb excess liquidity through bond issuance and keep interbank rates high. With high interbank capital costs, no bank can maintain low lending rates indefinitely.

Will lending rates rise with deposit costs? Dr. Huỳnh Trung Minh believes the State Bank will continue to call for rate reductions, so commercial banks will strive to increase rates moderately to protect their gross margins while controlling bad debt.

Observations show that many banks have reduced net interest income while increasing fee-based revenue, shrinking branch networks, and cutting staff in non-essential areas to minimize operating costs. “Businesses should take advantage of short-term working capital loans now, as capital costs will increase by at least 0.8–1 percentage points from the second quarter of 2026. Rates will rise gradually, but the overall interest rate level is likely to edge up,” predicted Dr. Huỳnh Trung Minh.

Mr. Phạm Chí Quang, Director of the Monetary Policy Department at the State Bank of Vietnam, stated that amid multi-dimensional market pressures, the regulatory authority has synchronously and flexibly managed monetary policy tools to regulate VNĐ liquidity. This supports market liquidity, stabilizes the monetary market, and facilitates capital supply to the economy, while also stabilizing the USD/VNĐ exchange rate. “The State Bank has various monetary regulation channels and flexibly uses these tools at different stages to align with market developments. To meet liquidity needs, especially at year-end, alongside supplying money through open market operations, we have implemented foreign exchange swap transactions with credit institutions to stabilize the monetary market. The State Bank will continue to closely monitor developments and proactively regulate using appropriate tools and solutions with suitable timing and dosage to support exchange rate stability and macroeconomic stability,” said Mr. Phạm Chí Quang.