Lumen Vietnam Fund

Blog

Credit growth slows, slips in first half of October

Credit growth slows, slips in first half of October

Credit growth across Vietnam’s banking system eased from 11.59% at the end of September to 11.44% as of October 14, indicating that lending momentum has stalled and even edged down in the short term.

Meanwhile, the State Bank of Vietnam (SBV) continues to urge banks to cut both deposit and lending rates.

Credit growth sees short-term reversal

According to information released by SBV Governor Pham Duc An at a meeting on Monday, outstanding credit to the economy reached VND20,720 trillion ($800.73 billion) as of October 14, up 11.44% from the end of 2025 and 16.73% year-on-year.

The figure was lower than the 11.59% credit growth previously reported by the SBV. Earlier in October, the central bank said system-wide outstanding credit had reached around VND20,750 trillion ($801.89 billion) as of September 30, up 11.59% from the end of 2025 and 16.69% year-on-year.

This means credit growth since the beginning of the year had fallen by around 0.15 percentage points in just the first half of October.

The development is noteworthy as Vietnam pursues an ambitious economic growth target, which is expected to drive strong demand for capital for production, business activities and investment.

Alongside the credit slowdown, pressure to cut interest rates is mounting. On October 19, the SBV held a meeting with credit institutions chaired by Governor Pham Duc An, following the issuance of Official Letter No. 9608/NHNN-CSTT on measures concerning credit institutions’ operations.

At the meeting, the governor stressed that banks must simultaneously cut operating costs, share profits and reduce funding costs to deliver meaningful lending-rate reductions. Deposit rates are a key component of funding costs; if banks continue to raise them, their room to lower lending rates will be limited.

Under the SBV’s requirements, credit institutions must initially cut listed deposit rates by at least 0.5 percentage points per year for maturities of six months or longer. They must also avoid competing to raise deposit rates in ways that create unfair competition and destabilize the money market. At the same time, banks must introduce measures to cut lending rates by 1.5-2 percentage points per year for production, business activities and priority sectors.

Notably, rate cuts are not intended to be applied uniformly. Banks must target the appropriate borrowers and extend reductions to both existing loans and new lending. The SBV also requires tighter control over credit flowing into potentially risky sectors and warns banks against lowering lending standards to pursue credit growth.

The latest directive follows several rounds of calls for lower interest rates since the beginning of the year. It also signals that regulators want to translate general instructions into more concrete action on both the funding and lending sides.

SBV has called for rate cuts six times

Since the beginning of 2026, the government and the SBV have repeatedly urged the banking system to lower interest rates. Key milestones include Directive 01/CT-NHNN issued early in the year; a meeting with 46 commercial banks on April 9; corrective and follow-up directives in May; further instructions on interest-rate support and credit in subsequent months; and the latest call on October 18. In total, the SBV has called on banks to cut interest rates six times this year.

Following the latest directive, the market has seen concrete responses in both deposit and lending rates. Among state-owned commercial banks, BIDV has launched a short-term dong lending program with rates starting at 6% per year, up to 2 percentage points below its usual rates, depending on loan maturity and sector.

Vietcombank has pledged to cut lending rates by at least 2 percentage points per year from now until the end of the year.

Agribank also launched a program on October 19 to cut lending rates by up to 2 percentage points per year, with around VND2 trillion ($77.27 million) earmarked to support customers.

Among joint-stock commercial banks, LPBank and VietBank were among the first to adjust their listed deposit rates on Monday.

LPBank cut rates by 0.5 percentage points per year for maturities of six to 12 months and by 0.6 percentage points for maturities of 13 to 18 months. Notably, it also reduced rates by 1.6-2 percentage points per year on newly disbursed short-term loans for production and business activities.

VietBank cut deposit rates by 0.5 percentage points per year for maturities of six to 36 months.

The market has also reported that ACB would adjust its deposit rate schedule from Tuesday. The specific reductions should be checked against the bank’s official rate schedule before publication.

These moves suggest that regulatory instructions are beginning to translate into concrete programs. However, the maximum reductions announced under individual programs do not mean that all customers will receive equivalent cuts in their borrowing rates.

Assessing the outlook for the remainder of 2026, brokerage VNDirect said interest rates were likely to remain relatively stable through the end of the year, with more pronounced declines from early 2027 as external pressures ease. The forecast reflects constraints from inflationary pressures, strong demand for capital and the possibility of further U.S. interest-rate increases.

Funding pressures are also making rate cuts difficult to implement evenly across the banking system. According to Bao Viet Securities (BVSC), deposit growth remains below credit growth, continuing to put pressure on banks’ funding. As a result, the SBV’s rate-cut directives may first affect preferential lending programs and listed deposit rates. For borrowing costs to decline sustainably across the broader market, however, banks will still need to improve deposit mobilization and liquidity management.


Source: Dinh Vu, Thai Ha

Latest Posts

Institutional reforms provide boost for business growth

Institutional reforms provide boost for business growth

Institutional reform should go beyond reducing red tape to build business confidence and encourage companies to invest and expand operations.

Hanoi (VNA) - Cutting administrative procedures, resolving legal bottlenecks and unlocking resources are key solutions to improve the business environment, give companies greater confidence to invest and strengthen their competitiveness, helping drive sustainable growth.

For businesses, the quality of the business environment is reflected in the time required to complete administrative procedures, compliance costs, access to capital and land, and policy stability. Institutional reform, therefore, should go beyond reducing red tape to build business confidence and encourage companies to invest and expand operations.

Nguyen Xuan Tho, Deputy Director of the Agency for Private Enterprise and Collective Economy Development under the Ministry of Finance, said the ministry has proactively reviewed practical conditions and advised the Government to issue Resolution No. 02/NQ-CP on key tasks and solutions to improve the business environment and enhance national competitiveness in 2026, with seven priority groups of measures and specific responsibilities assigned to ministries, sectors and localities.

The measures focus on improving the institutional framework, reviewing conditional business lines, streamlining administrative procedures, unlocking resources and supporting businesses. The goal is not merely to refine regulations, but to remove barriers directly affecting investment, production and business operations.

In the first nine months of 2026, efforts to review and improve the legal framework were stepped up. At the first session of the 16th National Assembly, lawmakers passed nine laws and 31 resolutions to promptly translate development policies into law.

The Ministry of Finance also advised on the refinement of various policies on investment, corporate income tax, personal income tax and tax administration, aiming to address shortcomings identified in practice.

One notable development has been the expansion of financial support for businesses. In the nine-month period, the ministry advised on and implemented tax, fee and charge exemptions, reductions and payment extensions worth a total of about 245.6 trillion VND (9.5 billion USD). These measures have helped ease cash-flow pressures, sustain business operations and free up resources for investment.

Another area of reform is strengthening dialogue with businesses and addressing their concerns. Tho said that, to date, ministries and agencies had responded to and fully resolved 146 of the 202 groups of business recommendations.

From the business community’s perspective, the gap between policy and implementation remains a major bottleneck in the business environment.

Ho Sy Hung, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said businesses could have different experiences with the same regulation depending on the locality.

Decisive implementation can help companies benefit from policies sooner, while delays elsewhere may cause them to miss investment and business opportunities, he elaborated.

In July 2026, VCCI compiled nearly 900 specific concerns raised by businesses into 53 groups of issues across 10 sectors. The feedback showed that businesses need not only individual administrative procedures to be resolved, but also a stable, consistent and predictable policy environment, Hung said.

Hung said that while the previous phase focused on breakthroughs in institutional reform, the next should place greater emphasis on breakthroughs in implementation.

Reform should therefore be measured not simply by the number of amended regulations or procedures cut, but by whether policies are implemented consistently, processing times are genuinely shortened and business costs are reduced, he added.

To narrow this gap, Tho suggested ministries, sectors and localities improve the quality of lawmaking, resolutely remove barriers to market access, further simplify administrative procedures, make processes transparent and standardise how business recommendations are received and addressed.

Digital transformation in public service delivery should go hand in hand with reducing unnecessary face-to-face interactions, curbing informal costs and strengthening dialogue to resolve problems at an early stage, he said.

Tho also proposed reforming state management by shifting from pre-inspection to post-inspection, as appropriate for each sector, based on clear standards and technical regulations and stronger risk-based oversight.

Business environment reforms should also be aligned with the goal of improving growth quality. Nguyen Duc Hien, deputy head of the Party Central Committee’s Commission for Policy and Strategy, stressed that in the new phase, promoting the private sector, harnessing the potential of all economic sectors, and advancing science and technology, innovation and digital transformation are key foundations for achieving the target of double-digit economic growth.

Hien said traditional growth drivers need to be revitalised to meet new development requirements. For exports, the focus should go beyond increasing turnover to raising value added, boosting the share of value created domestically and setting appropriate development directions for each industry group.

Sectors with the potential to drive growth and generate spillover effects, including research and development (R&D), tourism, logistics, energy, and finance and banking, need to be promoted.

Meanwhile, established industries such as electronics, digital technology, textiles and garments, footwear, and food processing should continue to upgrade product quality, strengthen technological capabilities and increase domestic value added, Hien suggested.​

Vietnam corporate bond market slows as interest rates rise

Vietnam corporate bond market slows as interest rates rise

Vietnam’s corporate bond market slowed in the third quarter of 2026, with issuance value falling 26% from the previous quarter, while issuance yields continued to rise across all sectors.

Bond issuance slows

According to a recent report by S&I Ratings, Vietnam’s corporate bond market recorded 153 successful issuances in the third quarter, with a total value of VND179.4 trillion ($6.93 billion), down 26% from the second quarter.

The trend mirrored 2025, when issuance surged in Q2 following a sluggish start to the year before correcting in Q3.

Year-on-year, issuance value in Q3 rose 7.8%, while the cumulative increase for the first nine months reached 6.7%.

Notably, public bond offerings performed strongly, with 16 successful issuances in Q3 worth a combined VND31.6 trillion ($1.22 billion), up 55% year-on-year and the highest level on record.

Commercial banks continued to dominate this channel, accounting for eight of the 16 offerings. Individual issuances were mostly valued at VND1 trillion to VND3 trillion ($115.93 million), while Agribank alone successfully issued VND15 trillion.

In the first nine months, total corporate bond issuance reached VND464.1 trillion ($17.93 billion). During the same period, bonds worth VND132.8 trillion ($5.13 billion) matured, up 5.7%, while early bond buybacks totalled VND228.6 trillion, down 4.5%. Net issuance value was reported at VND102.6 trillion ($8.83 billion).

As of the end of September 2026, outstanding corporate bonds totalled approximately VND1,540 trillion ($59.51 billion), up 7.1% from the end of 2025.

According to S&I Ratings, real estate bond issuance corrected in Q3 after surging in Q2. The number of successful issuances fell from 43 to 21, while total issuance value dropped 55% quarter-on-quarter.

The decline was mainly driven by changes in fundraising activity among major corporate groups. Issuance by the Vingroup group fell to VND16 trillion ($618.3 million) in Q3 from VND61 trillion in the previous quarter. Meanwhile, the Masterise group maintained issuance at VND23.5 trillion ($908.14 million) in Q3.

The ratings agency said the two corporations typically account for as much as 80% of total issuance by the real estate sector, giving their fundraising activity a significant influence on the industry's overall performance.

Despite the sharp quarterly decline, real estate bond issuance in Q3 was still up 27% from a year earlier. For the first nine months as a whole, issuance increased 121% year-on-year.

S&I Ratings noted the real estate market was facing difficulties amid rising interest rates, which were affecting project implementation schedules and companies' financing costs. However, substantial funding requirements for project development would remain a key driver of real estate firms' bond fundraising in the coming period.

In the banking sector, total bond issuance reached VND120 trillion ($4.64 million) in Q3, up 11.8% year-on-year and 7% from Q2. However, cumulative issuance in the first nine months remained 20% below the same period in 2025.

With banks accounting for around two-thirds of total corporate bond issuance, the sector's decline was also a key factor behind the market's slower growth.

Issuance rates approach 2022-2023 peaks

Corporate bond issuance rates continued to rise across all sectors in Q3/2026. Coupon rates had increased by an average of around 250 basis points from their 2025 lows. However, the pace of increase slowed considerably in Q3 as rates approached the peaks recorded in 2022-2023.

For banks, the average issuance rate reached 8.85% per year in Q3, exceeding the 2022 average of 8.7%. However, it remained below the previous peak of 9.7%.

Bank bond coupon rates in Q3 generally ranged from 8% to 9.7% per year. Some issuances carried rates of 10% or higher, including Sacombank bonds with a fixed coupon of 10% and PVcomBank bonds paying a rate linked to the average 12-month savings deposit rate for individual customers plus a margin of 4.6 percentage points, equivalent to around 10.4% at the time of the report.

Meanwhile, issuance rates for real estate companies and firms in other sectors also rose sharply, reaching around 12.5-13% per year. Even so, these rates remained below the peak range of 14-14.5% recorded in 2022-2023.

The trend highlights continued increases in bond fundraising costs as interest rates approach levels last seen during the previous high-rate period.

Maturity pressures to rise in late 2026 and 2027

Maturity pressures in Vietnam's corporate bond market are expected to increase significantly in Q4/2026. S&I Ratings estimates that bonds worth around VND93 trillion ($3.59 billion) will fall due for repayment during the quarter, the highest amount for any quarter this year. Real estate companies account for approximately VND46.9 trillion ($1.81 billion), or nearly half of the market's total maturities.

The pressure is expected to intensify further in 2027. Total corporate bonds maturing next year could reach around VND276 trillion ($10.67 billion), up 22% from 2026. Real estate companies alone are expected to face approximately VND156 trillion ($6.03 billion) in maturities, accounting for 57% of the market total.

Against this backdrop, new bond issuance will serve not only to finance projects but also to play an important role in restructuring existing debt.

Beyond refinancing pressures, the economy's medium- and long-term funding needs are entering a period of strong growth to support real estate developments, urban areas, transport infrastructure, energy and industrial projects. Corporate bonds are therefore expected to remain an important funding channel, providing additional medium- and long-term capital to the economy.

However, the market's ability to absorb new issuance could be affected by domestic and international interest rate movements. Persistent inflation risks, coupled with international government bond yields remaining elevated, could keep interest rates high at least through the first half of 2027.

For bond issuers, this would mean higher financing costs, particularly for companies with high leverage or substantial funding needs.

S&I Ratings said the medium-term outlook for Vietnam's corporate bond market remained positive, supported by strong corporate funding demand and mounting refinancing pressures.

Nevertheless, with interest rates still high, the market would need more time to continue restructuring on a sustainable basis, attract a broader range of investors, and strengthen its role as a key source of medium- and long-term financing for the economy.


General Secretary, President To Lam begins official visit to the EU and Belgium

General Secretary, President To Lam begins official visit to the EU and Belgium

The visit aims to further strengthen cooperative relations with key partners in Europe.

General Secretary of the Communist Party of Vietnam Central Committee and President To Lam, his spouse, and a high-ranking Vietnamese delegation, arrived in Brussels on October 21 afternoon (local time), marking the start of an official visit to the European Union (EU) and the Kingdom of Belgium, at the invitation of European Council President António Costa and Belgian Prime Minister Bart De Wever.

According to the Vietnam News Agency, the top Vietnamese leader, his spouse and the delegation were welcomed at Melsbroek Military Airport by First Vice President of the Belgian Senate Andries Gryffroy; Belgian Ambassador to Vietnam Pieter Leenknegt; Vietnamese Ambassador to Belgium and Head of the Vietnamese Delegation to the EU Nguyen Huong Tra, among others.

The visit aims to further strengthen cooperative relations with key partners in Europe.

The visit takes place in the context of the ongoing deepening of Vietnam-EU relations. Since establishing diplomatic relations in 1990, both sides have gradually expanded cooperation in various fields. The Vietnam-EU Framework Agreement on Comprehensive Partnership and Cooperation, effective since 2016, provides an important political and legal framework for bilateral relations.

In January 2026, Vietnam and the EU upgraded their relationship to a comprehensive strategic partnership, opening opportunities to enhance cooperation in economics, trade, green transition, energy, innovation, security, and regional and international issues.

Regarding the Kingdom of Belgium, more than 50 years since establishing diplomatic relations in 1973, bilateral cooperation has been continuously strengthened in political, trade, agriculture, education, science and technology, and development cooperation. The two countries also actively coordinate in multilateral forums.

The visit reaffirms the importance of the EU and Belgium in Vietnam's foreign policy and international integration; it contributes to strengthening political trust, promoting the realization of high-level commitments, and advancing cooperative relations to a new stage of development.

Leveraging overseas resources, promoting knowledge and investment connections

On the same afternoon in Brussels, General Secretary and President To Lam, along with his spouse and the delegation, met with staff and employees of the Vietnamese representative agencies in Belgium and representatives of the Vietnamese community in Europe.

During the meeting, Ambassador Nguyen Huong Tra reported that the community of approximately 1.5 million Vietnamese in Europe is increasingly stable, deeply integrated, holds a position in the host countries, and always looks towards their homeland.

Associations, particularly the Union of Vietnamese Associations in Europe, have played a role in connecting the community, preserving cultural identity, and promoting friendly relations between Vietnam and European countries.

Representatives of the overseas Vietnamese expressed their desire to contribute more practically to the country's development, especially through connecting knowledge, technology, capital, and international networks with domestic projects. They also requested more attention to preserving the Vietnamese language and culture for the younger generation born abroad.

In his remarks at the meeting, General Secretary and President To Lam acknowledged and highly appreciated the contributions of the Vietnamese community in Europe to the country and the host society, particularly in business, science, technology, education, and culture.

He emphasized that in the new development phase, Vietnam needs to combine internal strength with international resources, promoting the great unity of the entire nation, including over 100 million compatriots in the country and 6.5 million Vietnamese living, studying, and working abroad.

Regarding Resolution No. 23-NQ/TW of the Politburo on the work of overseas Vietnamese, General Secretary and President To Lam affirmed that the Party and State will continue to improve institutions, mechanisms, and policies in a comprehensive, open, and breakthrough manner, creating conditions for overseas Vietnamese to participate deeply in socio-economic life, accompanying and co-creating in the country's development process.

He urged Vietnamese associations in Europe to continue to play a core role in solidarity, enhancing the community's position, and acting as a bridge to promote friendly and cooperative relations between Vietnam and European countries.

Particularly, the business community needs to actively bring Vietnamese goods to the European market and connect European businesses to invest in Vietnam. Experts, intellectuals, and scientists should promote research, develop advanced and strategic technologies, and implement cooperation programs and projects with the country.

General Secretary and President To Lam also called on ministries, sectors, and localities to proactively connect and create a favorable environment for overseas Vietnamese to invest in, research, and transfer technology to the homeland. Vietnamese representative agencies abroad must be a reliable support, protecting the legitimate rights and interests of the overseas Vietnamese, while promoting specific and practical cooperation programs.

On this occasion, General Secretary and President To Lam praised the initiative to organize the 5th Global Overseas Vietnamese Conference, scheduled to take place in Hanoi from December 17–20, 2026. He urged relevant agencies to coordinate and facilitate the participation of overseas Vietnamese.


See all blog