Vietnam's new rules could widen banks' lending capacity

MBS expects lenders with diversified funding sources to benefit more from the revised 95% LDR ceiling.

Vietnamese banks with diversified funding sources could gain more capacity to expand lending under new liquidity rules that raise the maximum loan-to-deposit ratio (LDR) to 95% from 85%, according to brokerage MBS as reported by The Investor.

Circular 50, issued by the State Bank of Vietnam, will take effect on 1 December 2026. It revises the calculation of the LDR and introduces new liquidity requirements for banks.

Under the new rules, banks that register to adopt the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) early can use the revised LDR calculation and higher 95% cap.

Lenders that do not opt for early adoption will remain subject to the existing calculation method and 85% limit until October 2028.

MBS said the impact would vary according to banks’ funding structures. Lenders with larger contributions from equity, retained earnings, overseas borrowing and net interbank funding are likely to benefit more. 
Those relying more heavily on corporate bonds and credit extended through channels other than traditional loans could see less favourable effects.

MBS expects Circular 50 to benefit listed banks overall, as early adopters could face less liquidity pressure and gain additional room to lend.

All banks must comply with both LCR and NSFR from 1 October 2028, although they can register for early adoption from the end of 2026.

The LCR measures whether a bank holds enough high-quality liquid assets to cover net cash outflows during a 30-day stress period. Its minimum requirement will start at 50% in October 2028, rise by 10 percentage points annually and reach 100% from October 2033.

MBS said revisions to the earlier draft of Circular 50 provide banks with greater flexibility during the transition to the new framework and support the adoption of Basel III standards.

The LDR of 27 listed banks has risen from previous periods but remains below the current 85% ceiling, reflecting growing pressure to balance funding and lending, MBS said.

The central bank has introduced short-term measures to ease liquidity pressure and support credit growth.

However, MBS warned that such measures are temporary and could increase maturity mismatches and liquidity risks if lending continues to grow rapidly.