At a recent meeting with the State Bank of Viet Nam (SBV) and credit institutions, Prime Minister Le Minh Hung called for immediate, substantive reductions in lending rates and strongly urged banks to channel credit into the right sectors at the right time. The SBV is also expected to use banks’ implementation of this critical requirement as a core basis for allocating their credit growth quotas for 2027.
Banks need to “give up” some of their profits
The Prime Minister’s call for lower lending rates comes as the economy’s cost of capital remains stubbornly high and is no longer concentrated among just a few groups of banks. A market survey shows that preferential rates for home and consumer loans are currently commonly set at 9–10% per year during the initial period, with some lenders charging more than 11%.
For other short-term loans, rates generally range from 7.5–9% per year during the first three to nine months, or around 8.5% per year for the first six months. The gap in lending rates between state-owned commercial banks and private banks is also rapidly narrowing.
Driving this trend is the continued rise in deposit rates since late 2025. Twelve-month deposit rates are currently commonly at 7–8% per year, while negotiated rates for some large deposits can reach around 9%. Meanwhile, the economy’s demand for capital remains highly substantial.
Following strict directives from Prime Minister Le Minh Hung and the SBV, the market saw a wave of lending-rate adjustments, with rates falling by 0.5–2.5% compared with last year. The move has also spread to a number of joint-stock commercial banks.
Among the major banks, Vietcombank, VietinBank, BIDV, and Agribank have each launched credit programmes worth 50–70 trillion VND, focusing on small and medium-sized enterprises, household businesses, and priority sectors. Interest rates have been set at least one percentage point per year below the average lending rate for loans of the same maturity.
Joint-stock banks have also quickly joined the move. MSB has earmarked 3 trillion VND for a programme offering rates from 8.5% per year. Sacombank has cut lending rates by two percentage points per year for import-export customers, while allocating an additional 10–15 trillion VND for preferential credit packages.
Many argue that requiring banks to lower lending rates is entirely reasonable. For years, the market has faced a stark paradox: businesses lack capital, struggle to access credit, or have to borrow at high cost, while many banks have repeatedly reported record profits.
The 2025 PCI report shows that more than 21% of businesses regard access to finance as their biggest difficulty, while 8.2% are unable to borrow or are reluctant to submit loan applications. Around 75% of businesses cannot obtain loans without collateral.
The proportion of loans requiring collateral in Viet Nam stands at 93.5%, well above the global average of 68.3%. In addition, 56.3% of businesses face stricter credit conditions and interest rates than large enterprises and state-owned enterprises, while 45% say borrowing procedures remain highly cumbersome.
Meanwhile, a report by SSI Research shows that the banks covered by the research firm recorded 95.7 trillion VND in pre-tax profits. This contrast does not mean bank profits are unreasonable, but it does raise the legitimate expectation that banks should share more with the wider economy. The “health” of businesses also fundamentally determines the quality of banks’ loan portfolios and their future profits.
Room for manoeuvre must come from efficiency
Nguyen Quang Huy, CEO of the Faculty of Banking and Finance at Nguyen Trai University, said that allocating credit growth quotas based on lending-rate reductions would force credit institutions to pay greater attention to funding costs, productivity, and management capacity.
However, lending rates can only fall sustainably if banks reduce both funding and operating costs. If lending rates decline while funding costs remain high, risks could emerge with a lag and severely affect the safety of the banking system.
When allocating credit growth quotas for 2027, the SBV needs to assess each bank’s risk-management capacity, asset quality, and funding costs, among other factors.
The criteria must be transparent and precisely quantifiable, with an appropriate time lag to distinguish between slow reductions in lending rates due to insufficient effort and objective constraints related to funding and liquidity. In the long term, the goal is not to create the cheapest possible credit, but to ensure that capital is available at a reasonable cost, allocated to the right businesses and sectors, and used to generate the highest productivity.
Economist Dr Nguyen Trung Kien said sustainable room for interest-rate reductions must come from the rigorous restructuring of banks’ own operations. Banks need to accelerate the digitalisation of lending processes and drastically reduce paperwork and assessment times.
If banks continue to rely primarily on collateral, many businesses with orders, stable cash flows, and viable business models will still struggle to access capital at a reasonable cost.
According to Kien, banks should increase the use of credit scoring based on actual cash flows, e-invoices, and businesses’ tax histories. Banks can lower interest rates for financially sound customers without compromising safety standards.
From an implementation perspective, Assoc. Prof. Dr Nguyen Van Phuong, a lecturer at the University of Economics, Viet Nam National University, Ha Noi, said a key requirement following the authorities’ directive is to establish a robust mechanism for verifying results. Regulators should periodically publish average lending rates by customer group, loan maturity, and priority sector; monitor actual disbursement rates under preferential credit programmes; and receive feedback on fees or conditions that increase the overall cost of capital.
The actual operations of banks also show that sustainably reducing lending rates is not straightforward when funding-cost pressures are significant. However, this does not mean banks are being asked to sacrifice profits at all costs. Banking operations are closely tied to people’s deposits and the safety of the financial system. But caution cannot be used as a reason for support packages to remain mere figures announced on paper while businesses continue to struggle to obtain loans.
After a period in which the Government cut and deferred taxes and fees, promoted public investment, and the SBV supported liquidity, banks’ willingness to share the economic burden should be viewed as part of the broader economic recovery policy. Businesses that lack capital and scale back operations today could translate into weaker credit growth and higher non-performing loans for banks tomorrow. This is a comprehensive issue involving the cost of capital, liquidity, credit quality, operational efficiency, and market transparency.
