Credit institutions continue to implement measures to reduce lending interest rates

Speaking at the meeting, Deputy Governor Pham Thanh Ha emphasised that, under the direction of the Government and the Prime Minister, the SBV has instructed the credit institutions to continue implementing measures to stabilise the common deposit interest rates, thereby creating favourable conditions for reducing the lending interest rates. These measures include cutting down on the operational costs, enhancing the application of the information technology, simplifying the administrative procedures, and demonstrating a willingness to share a portion of their profits to support businesses and individuals accessing bank credit, boosting business expansion and production growth. However, a few commercial banks have recently raised their deposit interest rates, which may compromise the efforts to lower the lending interest rates. Therefore, the continued strong implementation of the measures to reduce the lending interest rates remains essential.

Strengthening efforts to reduce interest rates

Providing an update on the recent interest rate situation, Mr. Pham Chi Quang, Director General of the Monetary Policy Department, stated that the Government, the Prime Minister, and the SBV Governor have issued numerous guiding documents to regulate the interest rates at an appropriate level, in alignment with the Socio-Economic Development Plan and the state budget estimates for 2025. The Government has also requested specifically for further cuts of the operational costs, enhancement of the application of IT and the digital transformation, and other solutions related to the lending interest rates. Earlier, in Government’s Dispatch No. 19 dated 24 February 2025, the Prime Minister had instructed the SBV to ensure that the credit institutions strictly comply with the Government’s directions, be ready to share part of their profits to lower the lending interest rates, and support the businesses and individuals accessing the banks’ credit, aiming to promote the business and production development while positively impacting the banking operations.

Mr. Pham Chi Quang, Director General of the Monetary Policy Department, speaks at the meeting

The credit institutions have actively cut down on their operational costs, enhanced the application of information technology, simplified administrative procedures, and re-organised their operations for greater efficiency. They have also demonstrated a strong sense of responsibility to the community and the society by sharing a portion of their profits to lower the lending interest rates, ensuring broader access to the banks’ credit, and fostering the economic and business growth. According to the leaders of several commercial banks, they have consistently followed the directions of the Government and the SBV, maintaining stable interest rates. The increases in the deposit interest rates have only been observed in a few small joint-stock commercial banks, and have been insignificant.

Additionally, the SBV has adjusted the credit management policy to enable the credit institutions to supply more capital to the economy and to drive the economic growth. On 30 December 2024, the SBV made public notifications about the credit growth targets for the credit institutions in 2025, allowing the credit institutions’ proactive implementation. The overall credit growth target for 2025 has been set at 16%. As of 18 February 2025, the total outstanding credit in the banking system reached VND 15,620 trillion, marking a 0.02% increase against that of December 2024, and a 16.35% increase as compared to the same period last year.

To support a strong economic growth and to achieve the 2025 GDP growth target of 8% or higher, the banking system has made significant efforts to maintain the stability of and closely monitor the deposit interest rates, enhance the transparency in the lending interest rates by requesting the credit institutions to publicise them on their websites, and reduce the difficulties in accessing credit for businesses and individuals.

Credit institutions pledge to reduce lending interest rates

The leaders of the commercial banks attending the meeting re-affirmed their commitment to further reducing their operational costs in order to lower the lending interest rates, contributing to the inflation control and achieving the economic growth targets set by the National Assembly and the Government for 2025 and beyond.

An overview of the meeting

In the coming period, the SBV will continue to implement the monetary policy tools effectively to assist the credit institutions in transforming the mobilised capital into credit, focusing on investment and business activities. This approach aims to foster the economic growth, maintain the macroeconomic stability, control the inflation, and ensure sufficient liquidity for the credit institutions to provide capital to the economy.

As the deposit interest rates remain a key concern, the Director General of the Communication Department of the SBV emphasised that the commercial banks should publicise their interest rates and communicate relevant information transparently to businesses and the public. Inconsistent interest rate adjustments across banks could lead to liquidity concerns, affecting the safety and security of the banking system, particularly in cases where banks offer significantly higher deposit interest rates than the market average.

In the upcoming time, the SBV will proactively and flexibly manage the monetary policy to stabilise the exchange rates when necessary. The exchange rate policies will also be adjusted in accordance with the domestic and international market developments, and the SBV will be prepared to intervene in the foreign exchange market to maintain its stability amid global economic fluctuations and trade policy uncertainties. This strategy aims to strengthen the public and business confidence in the local currency.

Additionally, the SBV will conduct inspections of the commercial banks that have recently increased the deposit interest rates. Strict supervision will be enforced over the credit institutions’ interest rate announcements, their lending activities, and overall operations. Any violations, particularly those involving non-transparent interest rate disclosures, unfair competition, or non-compliance with the legal regulations, will be subject to strict legal actions.

The SBV will also closely monitor the operations of the credit institutions to ensure that its interest rate policy is aligned with the market developments, the macroeconomic conditions, the inflation situation, and the overall monetary policy objectives. The credit institutions will be requested to further reduce their operational costs, accelerate the digital transformation, and implement other solutions to lower the lending interest rates. Furthermore, they will be requested to disclose their common lending interest rates publicly.

Finally, the SBV will continue refining the credit growth management mechanism and progressively move toward phasing out from the management applying credit growth quotas. Adjustments to the credit growth targets will be made proactively, based on the macro-economic developments and the actual conditions, without requesting the credit institutions to submit requests, ensuring the continued promotion of the economic growth.

HP