Vietnam’s banking sector has entered the fourth quarter under tight lending conditions after strong credit growth earlier in the year exhausted most institutions’ allocated lending room. Despite repeated market expectations, the State Bank of Vietnam (SBV) has not yet approved a new credit expansion for commercial banks, leaving supply constrained heading into year-end.
The slowdown marks a significant policy shift, as banks have typically received additional lending capacity during October or November in previous years.
Credit Appetite Surged Early, Leaving Little Room Now
Credit growth accelerated sharply in the first nine months of 2025, rising nearly 14 percent and absorbing most of the allocated limits across the banking system. By late September, many institutions had already reached or exceeded their annual ceilings.
Two short sentences. There was no space left.
OCB, for example, has nearly exhausted its assigned 13–14 percent lending allowance. The bank reported outstanding loans exceeding VNĐ200 trillion by the end of the third quarter, up 13.7 percent from early 2025. Like several peers, OCB is now awaiting SBV approval to issue new credit.
One-sentence paragraph: Lending activity has lost momentum without fresh limits.
Only a small group of banks still has generous lending room. These institutions were rewarded with additional credit allowances after undertaking mandatory transfers of weaker banks, a policy designed to stabilize the sector. Their current lending activity is noticeably more flexible than that of their competitors.
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Analysts say the pace of credit allocation earlier in the year has made the final quarter unusually tight.
The bullet point reflects why conditions have shifted so quickly.
Unlike in past cycles, the SBV made its last major limit adjustment in July and has remained silent since then. Historically, fourth-quarter lending often surged 5–6 percent when credit was not tightly controlled. This year, growth could fall well below that threshold.
SBV Takes a Cautious Stance Amid Liquidity Pressures
Analysts at Việt Dragon Capital Securities (VDSC) believe the SBV’s reluctance to loosen credit is intentional. The central bank aims to stabilize interest rates at a time when liquidity is tightening and many large lenders have loan-to-deposit ratios approaching the regulatory ceiling of 85 percent.
One short sentence: The limits act as a brake.
Banks with high loan-to-deposit ratios have less internal liquidity, forcing them to compete for deposits and driving up capital costs. Expanding credit too aggressively would add pressure on deposit markets and risk destabilizing interbank rates.
The SBV is also wary of exchange rate volatility. Allowing more lending could indirectly increase USD demand and complicate currency management in the last months of the year, especially as the U.S. Federal Reserve approaches its final 2025 policy meeting.
Small paragraph: Stable rates and stable currency are now policy priorities.
Market expectations are divided. If the Federal Reserve cuts interest rates at its December 9–10 meeting, the SBV may reconsider a limited expansion. But analysts say the central bank appears more inclined to keep policy steady through year-end rather than stimulate lending.
A one-sentence paragraph: Caution is the baseline assumption.
Impact on Banks and Year-End Profit Expectations
Despite tighter lending room, VDSC analysts predict total banking industry credit could still grow around 18.2 percent this year, exceeding the SBV’s 16 percent target. This higher-than-expected expansion reflects strong early lending and disciplined allocation in the final quarter.
One sentence: The system has already locked in major momentum.
Rather than chasing more volume, banks are expected to focus on optimizing their remaining lending capacity through selective disbursement, margin management, and improved risk selection. That approach helps stretch limited lending room without significantly slowing revenue.
Here is a compact reference table summarizing the current outlook:
| Indicator | Fourth-Quarter Trend | Commentary |
|---|---|---|
| System credit growth | ~18.2% full-year | Higher than SBV target |
| Loan-to-deposit ratios | Near 85% cap | Liquidity pressure increasing |
| Net interest margin (NIM) | +10 bps expected | Despite capital cost pressure |
| Lending supply | Tight | New credit room unlikely |
This table illustrates why banks can still earn well even with limited credit headroom.
A one-sentence paragraph: Profitability remains solid.
Analysts expect strong fourth-quarter profit results, supported by early lending expansion and small improvements in net interest margins. However, capital costs are rising, interbank liquidity remains strained, and deposit mobilization will continue to elevate competition into early next year.
Why the SBV Is Comfortable Standing Still
Policymakers appear confident that holding credit steady through the fourth quarter will not materially harm economic activity. Much of the growth anticipated for 2025 was already front-loaded, and extending credit late in the year risks destabilizing interest rates, banking liquidity, and currency conditions.
One sentence: The SBV wants control, not acceleration.
In previous periods when capital flows were less tightly managed, fourth-quarter lending bursts amplified risk, increased leverage, and weakened pricing discipline. The central bank is determined not to revisit those conditions, preferring gradualism over expansion.
Some banks may petition for targeted relief, but the SBV is likely to prioritize systemic stability and currency balance rather than accommodate late-year surges. A controlled finish to 2025 reduces exposure to external shocks if global markets turn volatile.
Short paragraph: The short-term sacrifice is policy comfort.
Heading into early 2026, lending appetite will hinge on deposit acquisition, interbank stability, and any broader adjustments in monetary strategy. For now, constraint is the message, not stimulus.
