Vietnam’s New Banking Rules Could Boost Lending Capacity as Liquidity Standards Evolve
Vietnam’s banking sector could gain greater flexibility to expand lending under new liquidity regulations scheduled to take effect in December 2026. The revised framework is expected to create additional lending opportunities for banks with diversified funding sources while encouraging stronger liquidity management across the financial system.
According to analysis by brokerage MBS, the changes could benefit listed banks, particularly those that qualify for a higher loan-to-deposit ratio (LDR) under the updated rules issued by the State Bank of Vietnam.
New Regulations Raise the Loan-to-Deposit Ratio Limit
Circular 50 will introduce changes to the way banks calculate their loan-to-deposit ratios, increasing the maximum permitted level from 85% to 95% for eligible lenders.
The new regulation is scheduled to take effect on December 1, 2026. Banks that register for early adoption of the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) will be able to use the revised LDR calculation and benefit from the higher limit.
Banks that do not choose early adoption will continue operating under the existing calculation method and 85% ceiling until October 2028.
The adjustment could give qualifying lenders more room to manage their balance sheets and support additional credit demand from businesses and households.
Banks With Diverse Funding Sources Could Benefit Most
The impact of the new rules is expected to vary depending on how individual banks obtain their funding.
According to MBS, lenders supported by stronger equity positions, retained earnings, overseas borrowing and net interbank funding could benefit more from the revised calculation.
These funding sources may give banks greater flexibility in managing their lending activities while meeting regulatory requirements.
By contrast, banks that depend more heavily on corporate bonds and credit extended through channels outside traditional lending could experience less favourable effects under the revised framework.
This means that the potential benefits will not necessarily be distributed equally across Vietnam’s banking industry. Each lender’s funding structure and readiness to adopt the new liquidity standards will influence the outcome.
Basel III Standards to Shape the Banking Sector
Circular 50 also represents a further step toward strengthening Vietnam’s banking regulations in line with international liquidity standards.
Under the new framework, all banks must comply with both the LCR and NSFR from October 1, 2028. However, institutions can register for early adoption beginning at the end of 2026.
The LCR measures a bank’s ability to withstand short-term financial stress by maintaining sufficient high-quality liquid assets to cover expected net cash outflows over 30 days.
The minimum LCR requirement will begin at 50% in October 2028. It will then increase by 10 percentage points each year until reaching 100% in October 2033.
The NSFR focuses on longer-term funding stability, encouraging banks to maintain a more sustainable balance between their assets and funding sources.
Together, these requirements are designed to strengthen financial resilience and reduce the risk of liquidity shortages during periods of market uncertainty.
Lending Growth Creates Opportunities and Risks
Vietnamese banks have experienced increasing pressure to balance lending growth with funding availability. MBS noted that the loan-to-deposit ratios of 27 listed banks have increased compared with earlier periods, although they remain below the existing 85% regulatory ceiling.
The State Bank of Vietnam has also introduced short-term measures intended to ease liquidity pressure and support credit expansion.
Nevertheless, MBS cautioned that temporary liquidity support cannot replace sustainable funding strategies over the long term.
If credit growth accelerates faster than stable funding sources, banks could face greater maturity mismatches and increased liquidity risks. Such conditions may create additional challenges during periods of financial market volatility.
Consequently, banks will need to evaluate their funding structures carefully before deciding whether to adopt the new requirements early.
What the New Rules Mean for Vietnam’s Banking Industry
The revised regulations could provide a more flexible environment for eligible banks while encouraging the industry to improve liquidity management and funding stability.
Lenders with diversified funding sources and stronger financial foundations may be better positioned to take advantage of the higher LDR limit. Early adoption could also help banks prepare for the transition to stricter liquidity requirements.
However, the potential benefits will depend on individual institutions’ balance sheets, funding costs, credit quality, and ability to comply with the new standards.
For investors and businesses, the regulatory changes will be worth monitoring as Vietnam’s banking sector continues to respond to credit demand and evolving financial requirements.
Ultimately, Circular 50 seeks to balance two important objectives: supporting lending activity and maintaining a resilient banking system. Whether the new framework leads to sustained credit expansion will depend on how effectively banks manage liquidity and secure stable funding in the years ahead.
Disclaimer: This article is for general informational and educational purposes only. It does not constitute investment advice or a recommendation to buy or sell any financial instrument.
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