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KB Securities (KBSV) reported that at a State Bank of Vietnam (NHNN) meeting with commercial banks on 09/04/2026, the parties discussed increasing the flexibility of regulations aimed at cooling market interest rates. The proposals under consideration focus on revising timelines and technical components used to calculate the loan-to-deposit ratio (LDR), with potential knock-on effects for deposit competition and credit growth.
One measure being considered is revising or extending the timeline in Circular 26. KBSV noted a proposal to allow maintaining a portion of the State Budget’s deposits (for example, 20% as in 2025) in the calculation for a longer period, rather than cutting the portion to zero.
Technical adjustments to the LDR formula are also under consideration. These include expanding the components counted as “Funding,” such as long-term loans from international financial institutions or long-term certificates of deposit with higher weights, with the stated aim of easing household funding pressure.
In addition, the cap on LDR could be raised—for example, from 85% to a range of 87–90%—for banks with strong capital adequacy (CAR).
KBSV highlighted that, since 01/01/2026, the 100% deduction of KBNN deposits has taken effect. This has lowered the denominator (Funding) for many state-owned banks, pushing their LDR higher.
To bring LDR below 85%, banks may need to raise deposit rates for residents, which could intensify competition for rates across the market.
KBSV said that if relaxing the deduction on KBNN deposits is approved, it could reduce the pressure for banks in that group to raise rates. It may also act as a floor for system-wide rate stabilization.
The analysis further suggests that loosening LDR rules could create a credit advantage for state-owned banks. Restoring KBNN deposits to the calculation would help state-owned banks improve their LDR, supporting further credit growth in the near term.
More broadly, if LDR loosening is approved, KBSV expects system-wide credit growth to improve. This could allow banks to accelerate disbursement, particularly for key public investment projects and manufacturing, providing additional growth momentum for the economy.
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