Bank deposits overtake credit growth in late August

Bank deposits overtake credit growth in late August

Vietnamese đồng deposits at banks grew faster than credit by late August, reversing a trend seen earlier this year and easing some short-term liquidity pressure, although banks continue to face high funding costs amid strong demand for loans.

A transaction at a private bank in HCM City. — VNS Photo Bồ Xuân Hiệp

Vietnamese đồng deposits at banks grew faster than credit by late August, reversing a trend seen earlier this year and easing some short-term liquidity pressure, although banks continue to face high funding costs amid strong demand for loans.

Speaking at the Government’s regular meeting, Trần Quốc Phương, deputy minister of finance, said that as of August 22, Vietnamese đồng deposits at credit institutions had increased 8.77 per cent from the beginning of the year, slightly exceeding the 8.38 per cent growth in Vietnamese đồng lending.

The development marked a reversal from late June, when deposits had risen by just over 5 per cent, compared with 7.4 per cent growth in credit, according to State Bank of Vietnam data.

However, the improvement was less pronounced when foreign-currency deposits were excluded.

Total outstanding credit stood at around VNĐ20.4 quadrillion as of August 22, more than 9 per cent higher than at the end of 2025, while total deposits exceeded VNĐ19 quadrillion, up 7.97 per cent.

The difference reflects a decline in foreign-currency deposits, meaning total deposits have yet to catch up with total credit despite the stronger growth in Vietnamese đồng deposits.

Banks have continued to step up efforts to attract funding through conventional deposits, certificates of deposit (CD) and bonds as credit demand remains strong.

Deposit interest rates at a number of banks have risen above 9 per cent a year, with some lenders offering rates of around 10 per cent for certain maturities and deposit conditions.

The elevated rates reflect continued competition among banks for stable funding and have kept their cost of capital under pressure.

At a recent banking conference, Phạm Như Ánh, chief executive officer of Military Commercial Joint Stock Bank (MB), said banking-system liquidity toward the end of the year would depend partly on the pace of public-investment disbursement.

Faster disbursement would help support cash flows and liquidity in the banking system, while delays could prolong pressure on monetary policy and banks’ funding needs, he said.

He forecast lending rates would remain broadly stable through the end of the year, with the central bank’s monetary-policy stance likely to be a more important factor than any temporary improvement in banking-system liquidity.

The latest deposit data suggest that funding conditions have improved from the second quarter, but banks are still operating in an environment of strong credit growth and intense competition for deposits.

The narrowing gap between deposit and credit growth could therefore help reduce pressure for further increases in deposit rates, while the overall funding situation remains closely tied to credit demand and the flow of money into the banking system. 

Bizhub