Vietnam's New Credit Growth Cycle: Can coordinated policy reforms unlock Vietnam's next wave of growth?

Since the beginning of 2026, the State Bank of Vietnam (SBV) has introduced a series of policy measures aimed at steering and accelerating capital flows toward priority sectors of the economy. Most recently, the SBV issued Circular No. 25/2026/TT-NHNN, alongside a special regulatory mechanism that allows the outstanding loans of 18 key projects developed by Vingroup, Sun Group, and Masterise to be excluded from the banking system's credit growth quotas. The speed at which these measures have been introduced is unprecedented, marking a significant policy milestone designed to accelerate the flow of capital into the economy.

Source: Compiled by Virtus Prosperity

Specifically, on June 23, the SBV issued a special credit mechanism for 18 key projects of Vingroup, Sun Group and Masterise, with a total mobilized capital demand of more than VND 752,000 billion. Accordingly, outstanding loans for these projects will be excluded when calculating the credit growth limit (credit room) of banks participating in capital financing.

The list of 18 projects of VinGroup, Sun Group and Masterise are entitled to special mechanisms.

(Unit: billion VND)

Source: Official Letter 5386 of the State Bank of Vietnam on granting credit to 3 enterprises Vingroup, Masterise and Sun Group

1 day earlier, the SBV also officially issued Circular 25/2026/TT-NHNN (effective from July 1, 2026) to raise the SMLR ceiling (short-term capital ratio to medium and long-term loans) back to 40% after a long tightening roadmap from 2020 and change the calculation method of the LDR index to "increase" the lending capacity of some commercial banks. Specific contents include:

• Raising the ceiling on the ratio of short-term capital to medium and long-term loans (SMLR) from 30% to 40%, reversing the tightening roadmap that the State Bank has maintained since 2019 when the SMLR ceiling was gradually lowered from 40% to 30% from the end of 2023 and maintained until now.

  
  

• Adjustment of the calculation of the ratio of outstanding loans to total deposits (LDR): Adjust the section "Deposits of domestic and foreign organizations" from excluding 100% of deposits of the State Treasury to excluding 80% of the balance of term deposits of the State Treasury. This means that 20% of the term deposits of the State Treasury are added to the LDR form, helps the LDR rate to be mechanically reduced.

According to Expert Tran Trong Duc, CEO of Virtus Prosperity, the regulation on the SMLR ceiling was first issued by the SBV in 2009, in the period 2009-2014, the SMLR ceiling value was kept fixed at 30%.

By 2015, the SMLR ceiling was officially extended to 60% and gradually tightened from 2015 to the present. It can be said that, in addition to the first year of officially applying this rate, 2026 is the first time that SMLR is officially extended after a decade of tightening.

Source: Compiled by Virtus Prosperity

Looking back at the macro context in 2014, this is the period when Vietnam enters the recovery period and opens the growth phase of 2014-2018 with a credit growth rate of ~20%/year. The application of SMLR and quantitative easing after 10 years of tightening shows the determination of the operating system to use multi-tools to "pump" money into the economy.

Mr. Duc also said that there is another noteworthy point in Circular 25 is the assignment to the Governor of the State Bank to decide the exclusion rate of term deposits of the SBV. That is, it is creating an easier adjustment mechanism and creating more room to make adjustment policies to suit operating goals without spending much time.

A series of synchronous policies are being implemented to unleash capital flows into the market to promote economic development.

Expert Tran Trong Duc, CEO of Virtus Prosperity, emphasized: Circular 25 is not a tool to relieve the system in the short term, but an action to show strategy in the long term with a big growth picture when the determination has been clearly shown. From the lending supply perspective, Circular 25 eases regulatory requirements on lending to stimulate funding for long-term investment cycles.

This move comes amid the State Bank of Vietnam’s tightening of real estate lending quotas since early 2026, in response to the rapid overheating of real estate credit. Specifically, the outstanding real estate loans at each bank must not increase faster than the general credit growth rate and credit growth in the first 3 months of the year must not exceed 3.7%.

Meanwhile, on the demand side, the two major policies include:

1. At the end of May, the SBV adjusted the real estate credit control limit for 25 commercial banks, allowing the exclusion of the additional outstanding debt of loans for social housing, industrial parks and export processing zones will be removed from the real estate credit growth limit in 2026 and

   
   

2. At the end of June, the SBV issued a specific mechanism to allow the outstanding debt arising from 18 projects of Vingroup, Sun Group and Masterise to be excluded when calculating the credit growth of financing banks. The total value of 18 special projects is estimated at VND 750,000 billion (equivalent to 27% of the target credit level in 2026).

In general, all these policies were introduced very promptly with a clear common goal: to selectively expand credit growth across the banking system through multiple instruments, channeling capital into key growth-driving sectors such as infrastructure, energy, and other national flagship projects.

An additional VND 1 million billion in medium- and long-term capital is expected to flow into the economy.

When compared to the 2020–2021 period, when the medium- and long-term lending ratio (SMLR) was also around 40%, the proportion of medium- and long-term outstanding loans in the economy is projected to reach approximately 49% by the end of 2026, up from ~46% by the end of 2025.

With a credit growth target of 15% in 2026, the maximum additional medium- and long-term credit that can be injected into the economy thanks to the SMLR adjustment is estimated at nearly VND 1 million billion.

This is on the supply side. On the demand side, the targeted credit growth for 2026 is VND 2.7 million billion. If the outstanding loans from the 18 special projects (~VND 750 trillion) are also included, actual credit growth is estimated to reach ~19%, similar to 2025.

The banking sector is the first and most direct beneficiary.

The issuance and implementation of Circular 25/2026/TT-NHNN along with the above policies and mechanisms will have a positive impact on commercial banks. However, the degree of impact will depend on each bank’s funding structure and lending structure. Banks can be broadly divided into the following groups:

State-owned Commercial Banks (VCB, BID, CTG)

This group enjoys a “double benefit” as they can take advantage of both changes from the new Circular. They gain additional room from the increase in the SMLR ceiling to 40%, and also see direct improvement in their Loan-to-Deposit Ratio (LDR) thanks to the regulation allowing the exclusion of an additional 80% of term deposits from the State Treasury.

As of the end of Q1/2026, the SMLR ratios of CTG and BID stood at 25.7% and 25.6% respectively. The proportion of long-term loans in their portfolios was ~32% for both CTG and BID, and ~38% for VCB.

This structure indicates that CTG and BID still have significant room to grow their medium- and long-term loan portfolios and are not yet under heavy pressure from the current limits. Nevertheless, raising the ceiling still creates broader room for optimizing their medium- and long-term debt structure.

SMLR Ratio of Banks (as of Q1/2026)

Source: Compiled by Virtus Prosperity

State-owned commercial banks have a strong competitive advantage in lending to public investment projects and national key projects. With strong momentum from this group, credit growth of the state-owned bank segment is expected to benefit the most positively.

Commercial banks with high CASA ratio (TCB, MBB)

For commercial banks with a high proportion of CASA (low-cost current and savings accounts), their medium-and long-term lending has already approached the regulatory limit - MBB at 29% and TCB at 26.9%. The relaxation of the SMLR ratio creates significant room for MBB and TCB by reducing pressure on deposit mobilization, thereby lowering their cost of funds.

With TCB’s medium-and long-term loans accounting for up to 65% of total outstanding loans and MBB’s at ~50%, these two banks are expected to be the biggest direct beneficiaries of the State Bank’s new regulation.

Source: Compiled by Virtus Prosperity

Other Commercial Banks

For banks with a high proportion of capital-intensive long-term retail lending such as MSB, VPB, and TPB, raising the SMLR ceiling will ease their biggest current constraint. For the remaining banks, the policy will generally help reduce deposit mobilization pressure and improve funding costs.

Mr. Duc also emphasized his view on the banking sector, stating that in the coming period, there will be a clear differentiation. The above policy adjustments will bring greater advantages to state-owned commercial banks and large-scale private commercial banks that have strengths in capital mobilization and lending to large projects. Smaller banks will benefit much less.

In summary, this marks the beginning of a new growth cycle for the Vietnamese economy. It is not only the current policies being implemented, but also the faster and simpler decentralization and delegation of authority that will enable subsequent policies to be adjusted more swiftly and aligned with the actual needs of the economy.

This is in line with the orientation from the 2nd Plenum of the 14th Central Committee of the Party on the Socio-Economic Development Plan, National Financial Plan, Public Debt Management, and Medium-Term Public Investment Plan for 2026–2030, in conjunction with the goal of achieving “double-digit” economic growth (Conclusion No. 18-KL/TW).

The synchronization and promptness of these policy mechanisms demonstrate the strong determination of the political system to promote rapid, strong, yet sustainable growth, helping the country truly enter a new era of development