TPBank CEO: Deposit base around 7% stable, opens room to lower funding costs

Geopolitical conflict in the Middle East is emerging as a key macro variable influencing Vietnam’s economy and financial markets, according to experts speaking at the KBSV Investment Summit 2026 on 10 April. They said the conflict is affecting inflation dynamics through higher oil prices, while also complicating the management of exchange rates and interest rates—factors regulators must balance to maintain macro stability.

Middle East conflict as the decisive macro driver

Tran Duc Anh, Economy and Market Strategy Director at KB Vietnam Securities, said the Middle East situation is likely to shape the Vietnamese stock market’s direction through year-end by directly impacting core macro indicators, including inflation, exchange rates, interest rates, domestic consumption, FDI inflows and GDP growth.

He emphasized that interest rates are the market’s most closely watched factor. Although the State Bank of Vietnam (NHNN) recently met with commercial banks to seek room to cut the policy rate, the ability to apply strong liquidity-support measures depends on how inflation evolves.

Inflation pressure from oil prices and policy constraints

Anh noted that inflation has been kept below 4% for more than a decade, but rose to 4.7% at the end of March, exceeding the year-average target of 4.5% due to oil prices. He added that the reported inflation figure may not fully capture the real impact of the global oil price increase.

Two reasons were cited:

• Vietnam continues to actively use the Fuel Price Stabilization Fund, keeping domestic retail prices 20–30% lower than regional peers.
• Input costs in manufacturing sectors take time to pass through to consumer prices.

Under a base scenario where oil prices are near $90 per barrel, inflation is expected to hover around 4.5–5%, which would leave NHNN room to maintain stability or ease slightly. However, if oil prices rise above $100 per barrel, inflation would “surely” exceed 5%, limiting policy flexibility.

Given the Prime Minister’s stance on not sacrificing macro stability for short-term growth, monetary policy would likely remain cautious with limited room to loosen. In a worst-case scenario, if tensions push oil prices to $120–150, inflation would move well above 5%, forcing authorities to reconsider tightening measures.

Exchange-rate and interest-rate trade-offs

Nguyen Hung, CEO of TPBank, said exchange-rate management and interest-rate levels are effectively “two sides of the same coin,” with intervention in one area affecting the other. He said NHNN’s approach needs caution, particularly because Vietnam’s capital structure is imbalanced.

Hung explained that companies rely heavily on bank credit because the capital market is not deep enough, while the public typically does not deposit long-term beyond 12 months. To control systemic risk, NHNN has tightened the use of short-term funds for long-term lending to a maximum of 25%, narrowing monetary policy room.

Liquidity conditions and deposit-rate stability

Hung also described how regulators must balance capital support for enterprises with macro stability. He said there have been periods when system liquidity was ample, pushing VND short-term rates down to levels near USD overnight rates. This encouraged money to move based on market dynamics, including banks and institutions placing foreign currency deposits abroad to earn higher overnight yields, which in turn created downward pressure on the VND.

Despite these pressures, Hung said NHNN has maintained the depreciation of the VND at an acceptable level compared with sharper depreciation seen in many other regional currencies. He noted an episode when interbank rates in Market 2 fell below deposit rates in Market 1, which he described as abnormal and linked to banks exploiting cheap funds for lending—raising liquidity risks when Market 2 interbank rates later spiked.

He said that while volatility occurred in Market 2, deposit rates in Market 1 remained stable. Looking ahead, Hung forecast that deposit rates will stabilize around the 7% level in the near term, creating a basis for banks to lower lending rates.

NHNN signals on base rates and liquidity

Hung added that NHNN has signaled it will keep base rates unchanged and will not inject additional money into the open market. This is expected to reduce volatility in rate levels and support a more sustainable stabilization process.