Bank interest rates in Vietnam are currently under scrutiny following directives from the Prime Minister to the State Bank and credit institutions. Experts assert that simply lowering interest rates is insufficient; the focus must be on ensuring that these reductions effectively reach the final borrowers. This requires banks to manage their costs efficiently and for regulatory bodies to implement mechanisms that guarantee policies are beneficial without jeopardizing the financial system's stability.

According to Dr. Nguyen Van Loc, Director of the Trade Business Training Program at Phenikaa University, the call for banks to reduce lending rates is justified, but it must take into account the structure of capital costs. He noted, “Banks cannot sustainably lend at lower rates if deposit interest rates are high, liquidity is tight, or the risk of bad debts increases.” This highlights the complexity of the issue as banks strive to balance their operational costs.

During a recent online conference updating the second-quarter business results, VietinBank's leadership indicated a focus on managing capital costs rather than competing on deposit interest rates. They are prioritizing short-term deposits and foreign currency while directing funds to small and medium-sized enterprises and retail sectors that promise higher profitability.

HDBank has also acknowledged the real pressure of capital costs but remains optimistic, noting that interbank interest rates are currently low and some banks have begun adjusting their deposit rates. They predict that lending rates may stabilize or even decrease by the end of the year.

Dr. Loc emphasized that sustainable interest rate reductions must arise from restructuring operational processes. This involves digitizing credit processes to reduce paperwork and approval times, developing credit scoring based on cash flow, and improving management costs while effectively handling bad debts. Additionally, it is crucial to limit competition based on high deposit interest rates.

Moreover, the evaluation of small businesses needs to evolve. If banks rely heavily on collateral, many businesses with good cash flow and solid business models may struggle to access capital at reasonable costs. “There should be an increased focus on scoring based on actual cash flow, electronic invoices, tax history, and management capabilities. When risk assessments are more accurate, banks can lower rates for good customers without compromising safety standards,” Dr. Loc analyzed.

Dr. Nguyen Van Phuong, a lecturer at the National Economics University in Hanoi, stressed the importance of establishing a verification mechanism for results following the Prime Minister's directives. Regulatory bodies should periodically publish average lending rates by customer group, term, and priority sector, monitor the actual disbursement rates of preferential credit packages, and receive feedback on any fees or conditions that raise capital costs beyond interest rates. “Policies must focus on the final borrowers,” he emphasized.

Dr. Phuong also pointed out that a low-interest credit program with small limits and strict procedures, primarily benefiting already creditworthy customers, would have limited ripple effects. Conversely, businesses should not solely rely on banks to reduce interest rates. Especially for small and medium-sized enterprises, transparency in financial reporting, distinguishing personal and business finances, standardizing invoices, and proactively negotiating loan structures will enhance their access to capital.

A transparent business with predictable cash flow and a clear business plan will be in a better position to negotiate interest rates and help banks make more accurate risk assessments. “Reducing interest rates is not merely about banks sacrificing part of their profits. It is a comprehensive issue involving capital costs, liquidity, credit quality, operational efficiency, and market transparency,” Dr. Phuong concluded.

Currently, the banking sector is experiencing a trend of declining interest rates as several banks announce reductions in both deposit and lending rates. Recent reports indicate that the average lending rate across banks in July 2026 hovered around 9% per annum, with significant disparities among institutions.