Banks agree to cut deposit and lending rates following meeting with new governor

Right after the April 9 afternoon meeting chaired by newly appointed Governor Pham Duc An, commercial banks agreed to cut deposit and lending interest rates to support businesses and people. The decision came as competition among banks to mobilize funds pushed market interest rates up sharply in recent months.

State Bank meeting and policy direction

On April 9 in Hanoi, the State Bank of Vietnam (SBV) organized a banking operations meeting chaired by Governor Pham Duc An. Attending were deputy governors of SBV; leaders of SBV units; and the chairmen, board members, chief executive officers, and deputy CEOs of commercial banks.

Pham Chi Quang, Director of the Monetary Policy Department, said that in the first three months of the year SBV actively and flexibly conducted monetary policy to stabilize the macroeconomy, curb inflation, and promote economic growth.

Monetary policy measures described by SBV

SBV said it implemented flexible open market operations, proactively adapting to market developments and policy targets. It also conducted daily outright purchases of government securities with appropriate volume and a variety of maturities to support liquidity and stabilize the money market.

The central bank also managed the exchange rate and foreign exchange market in line with market conditions to absorb shocks, while coordinating policy tools to stabilize the foreign exchange market, macro stability, and inflation control.

Credit policy and risk controls

On credit, SBV said it will continue operating in line with government directives and the prime minister’s instructions. SBV set a credit growth target of 15% for the year for credit institutions to implement.

Banks were asked to tighten credit growth in high-risk areas, especially real estate, while directing lending toward production and business and priority sectors. SBV said this should be done in line with banks’ risk-management capacity, limiting rising bad debts and ensuring safe operations.

SBV also stated it will keep policy rates unchanged to facilitate access to low-cost funds from SBV to support the economy.

Why banks agreed to lower rates

SBV noted that recent international developments remain complex. Geopolitical and military tensions in the Middle East have pushed oil prices higher, creating inflationary pressure for many countries. Domestically, demand for capital to support growth remains large, posing challenges for monetary policy management and banking activities.

SBV said some commercial banks have competed for deposits, pushing up deposit and lending rate levels. In response, SBV held the meeting with commercial banks to reinforce implementation of government, prime minister, and SBV directives.

At the meeting, banks unanimously agreed to reduce market interest rates to support enterprises and people, committing to lower deposit and lending rates after the meeting.

SBV’s next steps and outlook

In the coming period, SBV said it will continue to closely monitor developments in deposit and lending rates and publish loan rates on banks’ websites. It will also implement appropriate monetary policy measures and be ready to provide liquidity support to commercial banks, while strengthening inspection and supervision and strictly handling violations in mobilizing funds and granting credit.

Bank liquidity is expected to remain stable through the end of 2027.