All 46 commercial banks in Vietnam have cut deposit interest rates following government and central bank calls for lower borrowing costs, but households remain hesitant to access credit as lending rates continue to decline slowly.
Banking transaction (Photo: Tien Tuan).
According to State Bank of Vietnam data, all 46 commercial banks have reduced their listed deposit rates by at least 0.5 percentage points for maturities of six months or longer since the authorities' mid-October directive.
The cuts are intended to create room for banks to lower lending rates. However, borrowing costs have declined at a slower pace than deposit rates.
As of November 4, average interest rates on new loans had fallen by only 0.2-0.5 percentage points per year compared with early October, according to the central bank. Many banks continue to offer loans at double-digit annual interest rates, discouraging potential borrowers.
Ha Linh, a resident of Tang Nhon Phu Ward in Ho Chi Minh City, said she had recently approached banks for a new loan after hearing the government's call for lower interest rates.
“Some credit officers quoted initial rates of around 10 per cent per year even after all promotional discounts were applied, before switching to floating rates of about 13-14 per cent,” she said. “These figures are much higher than those offered one or two years ago.”
Linh had planned to borrow an additional VND 1 billion (approximately USD 38,000) to complete a house under construction. However, with borrowing costs remaining high, her family has postponed the loan and is considering other options.
Military Commercial Joint Stock Bank (MB) said it had proactively lowered interest rates on both existing and new loans. Despite average cuts of 1.5-2 percentage points per year by the end of October, medium-term lending rates at the bank remained at 9-10 per cent annually.
A financial industry expert said the latest rate reductions were selective, prioritising businesses involved in production and commercial activities. Individual borrowers seeking loans to buy homes or cars were not among the main beneficiaries of the adjustments.
Credit incentives target businesses
Meanwhile, several banks have announced preferential lending programmes, focusing mainly on manufacturing, business activities and priority sectors.
Agribank, for example, is operating 24 preferential credit programmes with a combined lending allocation of VND 600 trillion. Outstanding loans under these programmes currently total around VND 300 trillion, with interest rates 2-2.5 percentage points below standard rates.
Since October 20, Vietcombank has also offered preferential loans to support production and business activities in priority sectors through the end of 2026, with annual interest rate reductions of 1.5-2 percentage points.
The latest rate adjustments are primarily aimed at supporting business and production activities.
The State Bank of Vietnam said it would continue providing liquidity and funding support to credit institutions while maintaining flexible exchange-rate management. It also aims to direct credit towards production, business activities and priority sectors while tightening controls on lending to areas considered potentially risky.