State-owned banks continue to enjoy ‘loose liquidity’

On July 30, the State Bank changed the way to calculate the State Treasury’s term deposits in banks’ capital when calculating the loan-to-total deposit ratio (LDR).

Accordingly, the mechanism This agency allows half of the State Treasury’s term deposit balance to be included in total deposits when determining LDR rates at banks. The regulations are effective from August 1, 2026 to July 31, 2028.

Specifically, the total deposits to calculate LDR will include: personal deposits, organizational deposits (including deposits of other credit institutions), mobilized through promissory notes, bills, certificates of deposit, bonds and 50% of term deposits from the State Treasury.

Two months ago, the State Bank also relaxed the way to calculate LDR, allowing banks to include 20% of State Treasury term deposits in total deposits, instead of completely excluding them as before.

Mr. Huynh Duy Sang, Director of Asia Bank’s (ACB) Financial Markets Division, said this adjustment helps banks have more lending space but does not change real liquidity.

Specifically, with 10 dong of Treasury term deposits, the bank is currently only allowed to count 2 dong in its total capital (LDR denominator), from August 1 it will increase to 5 dong. A larger denominator helps the LDR ratio decrease before reaching the regulatory ceiling, thereby reducing the pressure to mobilize more capital from the population and other channels.

If other factors remain unchanged, calculating an additional 30% on about 700,000 billion VND in Treasury deposits can create nearly 200,000 billion VND of loan space, equivalent to about 1% of the total outstanding debt of the economy.

Experts say that the group that benefits the most from this regulation is state-owned banks, which concentrate almost all of the State Treasury’s deposits. By the end of March, balances at Vietcombank, BIDV, Agribank and VietinBank accounted for more than 99% of total Treasury deposits (626,700 billion VND) throughout the system.

According to regulations, banks must keep the LDR ratio no more than 85%. Meanwhile, this ratio in the state-owned group is close to the ceiling. Vietcombank has the highest LDR, at 84.5%, followed by VietinBank 83.5%, Agribank 83% and BIDV 82.9% (as of the end of March).

“The State Bank allows 50% of the State Treasury’s term deposits to be included in the capital source, helping the LDR ratio of state-owned banks to decrease, meaning they can expand lending space without There is no need to lower capital safety standards,” an OCB leader assessed.

Continuous adjustments to the way Treasury deposits are calculated take place in the context of the economy’s increasing capital needs to serve the double-digit growth target. Credit is boosted, creating more pressure on the liquidity of the banking system.

The State Bank requires banks receiving term deposits from the Treasury to control the difference in scale and term between mobilized capital and capital use. Banks must ensure liquidity and payment capacity, even when the Treasury withdraws money before maturity, while fully maintaining safety ratios.

At the end of June, the Government also gave more proactive authority to the Ministry of Finance to decide on the limit for using temporarily idle state funds for term deposits at commercial banks. When necessary, the deposit limit to the State Treasury can exceed 50% of temporarily idle funds as currently prescribed.