Interbank rates rise; which banks face the greatest liquidity pressure?

Interbank rates rose to 12% at the end of March, prompting the State Bank of Vietnam (SBV) to continue injecting net liquidity to ease pressure in the money market. Rates increased on both Market 1 and Market 2, weighing on bank stock prices. However, stock movements are not expected to be uniform across banks, as performance depends on each bank’s reliance on interbank funding.

Liquidity has become a key focus for the banking system as credit growth has remained higher than deposits for an extended period. This gap increases demand for short-term funding, particularly in early 2026. Interbank rates spiked in February, and SBV interventions through Open Market Operations (OMO) cooled rates; nonetheless, liquidity pressure has continued to build, leaving rates positioned to rise again when pressure intensifies in specific segments.

Interbank market as a real-time indicator of liquidity stress

The interbank market has become an important monitoring channel because it reflects changes in banks’ cash flows early. When interbank rates rise sharply, signals about funding costs and liquidity conditions become more sensitive. In this context, market participants are concerned that interbank pressure could negatively affect bank stock performance in the short term.

How banks use the interbank market

When incoming funds do not match outflow needs, banks seek liquidity replenishment via the interbank market, a lending channel among credit institutions for managing short-term liquidity. If deposit growth cannot keep pace with credit expansion, banks often borrow from one another to maintain liquidity and sustain lending. This typically increases both the size and frequency of interbank transactions.

Banks with funding shortfalls borrow, while banks with excess funds lend or place funds with other credit institutions. As a result, banks’ balance sheets reflect both lending and deposits with other institutions, as well as borrowings and deposits received from other institutions.

End-2025: net lenders concentrated among large banks

What matters most is the net position after offsetting both sides—whether banks are net suppliers or net absorbers of liquidity. Year-end 2025 data show a clear divergence.

On the lending side, funds were concentrated mainly in large banks, especially VCB, with net lending of about 201 trillion VND. This was followed by CTG (58.8 trillion VND) and BID (39.5 trillion VND). The pattern reflects the funding advantage of state-owned banks and their role as primary liquidity suppliers in the interbank market.

Some mid-sized banks also posted net lending, including BVB, STB, HDB, and NVB, though at a much smaller scale.

On the opposite side, the net borrowing group dominates in number, with many banks reporting negative net positions. VPB, MBB, VIB, MSB, and TCB show net borrowings of tens of trillions of VND, with VPB near 109 trillion VND. This highlights liquidity pressure concentrated among banks with faster credit growth.

In some cases, large net borrowings also reflect funding structure characteristics: dependence on the interbank channel exceeds 25% of total funding for banks such as VIB and MSB. Overall, the interbank market operates as an adjustment mechanism: a smaller group of banks with excess liquidity acts as suppliers, while most banks rely on this short-term funding to balance cash flow.

Interbank rates and bank stock price expectations

Across Q1, the interbank rate level remained high, indicating persistent liquidity pressure rather than a temporary seasonal effect. With the ability to identify which banks are net borrowers and which are net lenders, the next question is how interbank developments translate into market expectations for bank stocks.

During the Feb 13, 2026 peak week: net lenders generally outperformed

Bank stock performance during the period when interbank rates spiked—peaking around the week before the Lunar New Year—showed a split between net lenders and net borrowers.

Of the 13 banks in a net lending position, eight posted positive returns during this period. Net lenders generally outperformed, with BID (+20.6%), VCB (+12.0%), and CTG (+8.0%) among the leading names. STB (+7.9%) and BVB (+2.3%) also recorded positive gains despite smaller scale.

By contrast, results were more mixed among net borrowers, with several banks posting negative returns. VPB, SSB, VIB, MSB, and SHB recorded negative returns. Some borrowers still posted positive performance, including MBB (+11.9%) and TPB (+2.3%). HDB, despite being in the net lending group, moved in the opposite direction.

After March 30: rates jumped to 12% and the borrower group weakened

Looking ahead to the period after March 30, when interbank rates jumped to 12% and SBV injected more than 31,000 billion VND to cool the market, the net lending group remained roughly flat while the net borrower group declined more sharply. SHB faced the strongest pressure, followed by TCB, VIB, and VPB (with SHB listed again among borrowers). Notably, MBB and MSB rose even though they belonged to the borrower group.

Impact assessment: liquidity status matters, but not in isolation

This pattern suggests the relationship between liquidity status and stock-price movements is not absolute. Market pricing also reflects other factors, including asset quality, expected credit growth, and prior valuation levels. In periods of volatile interbank rates, these differences help explain why volatility varies across bank stock groups.

As the upcoming Q1 earnings season approaches, higher interbank rates are expected to feed into metrics such as net interest margin, profits, and the ability to sustain credit growth. This should give the market a clearer basis to re-price the impact of liquidity on banks.

More broadly, the data indicate that evaluating the banking sector based on a single interbank rate is insufficient. Investors are expected to consider each bank’s liquidity position and business conditions. While rising interbank rates signal liquidity pressure, the price impact does not translate in a straightforward, direct way; understanding the sector requires examining funding structure and bank performance rather than focusing solely on interbank rate movements.