Year-end capital pressure fuels deposit rate race

Year-end capital pressure fuels deposit rate race

A survey of nearly 50 banks as of December 12 shows that six-month deposit rates have risen sharply compared with early in the fourth quarter, with adjustments reaching up to 1.5 percentage points.

Overall, six-month deposit rates in December 2025 are on a broad upward trend, driven by strong short-term funding demand and a system-wide liquidity squeeze. — VGP Photo

Mounting year-end funding pressure is intensifying competition in the deposit rate market, with as many as 29 banks raising six-month deposit rates since the start of the fourth quarter of 2025, while none have cut rates.

Interbank interest rates have meanwhile climbed to their highest level in three years, prompting the State Bank of Vietnam (SBV) to activate a new intervention tool.

A survey of nearly 50 banks as of December 12 shows that six-month deposit rates have risen sharply compared with early in the fourth quarter, with adjustments reaching up to 1.5 percentage points. Of the banks surveyed, 29 increased rates, while no reductions were recorded.

Small- and medium-sized lenders led the upward adjustments. PGBank posted the largest increase at 1.5 percentage points, followed by PVcomBank at 1.3 points, BacABank at 1.25 points, VikkiBank at 1.1 points and Hong Leong Bank at 1 point. Among large private banks, VPBank also raised its six-month rate by 1 percentage point, reflecting stronger capital mobilisation needs as liquidity pressure intensifies toward the end of the year.

Several other lenders, including Techcombank, VCBNeo, OCB and CIMB, raised six-month rates by between 0.6 and 0.9 percentage points to secure funding for peak credit demand in the final quarter.

Banks offering more than 6 per cent per year for six-month deposits include PGBank and BacABank at 6.5 per cent, VikkiBank at 6.4 per cent, VCBNeo at 6.2 per cent and NCB at 6.1 per cent. These institutions face heavier funding pressure than the market average, forcing them to adopt more aggressive rate adjustments.

Overall, six-month deposit rates are on a broad upward trend, driven by strong short-term funding demand and a system-wide liquidity squeeze. Differences in rate movements across bank groups also reflect variations in funding structures, dependence on the primary market and the intensity of competition in deposit mobilisation.

At shorter tenors of one to five months, which are subject to an SBV interest rate cap of 4.75 per cent per year, many banks have raised rates to the ceiling, marking a sharp increase compared with late September 2025. This highlights mounting pressure on short-term funding as the banking system enters its most strained liquidity period of the year.

The most pronounced fluctuations were again seen among small- and mid-sized banks, which rely more heavily on deposit mobilisation. Banks with more stable liquidity positions made only modest adjustments, suggesting that short-term interest rates remain under upward pressure and that competition for deposits is likely to persist.

In its latest money market report, MB Securities (MBS) noted that by the end of November 2025, the average three-month deposit rate at State-owned banks rose by 13 basis points from October to 2.03 per cent. Over the same period, the average rate at private commercial banks increased by 28 basis points to 4.2 per cent per year.

SBV data show that as of November 27, outstanding credit exceeded VNĐ18.2 quadrillion, up 16.56 per cent from the end of 2024, the highest growth rate in many years and well above the pace of deposit growth.

Analysts at AFA Capital said the elevated ratio stems from a widening gap between credit growth and capital mobilisation, with loans now approaching 110 per cent of deposits. When deposit growth fails to keep pace with lending, banks are forced to rely more heavily on the interbank market, pushing short-term interest rates higher and adding pressure to broader financial markets. 

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