Impact of Circular 50 replacing Circular 22

CIRCULAR 50/2026 REPLACES CIRCULAR 22/2019: MORE RELAXED THAN THE PREVIOUS DRAFT

On 30 September 2026, the State Bank of Vietnam (SBV) issued Circular 50/2026, replacing Circular 22/2019 on prudential limits and ratios in banking operations, effective from December 2026.

Circular 50/2026 is much looser than the April 2026 draft: the LDR cap rises from 85% to 95%, net interbank borrowings are added to the denominator, and the LCR roadmap is extended by two years, taking effect in 2028. Although the new LDR formula is 3–13 ppts higher than the current one, the 95% cap keeps 8/9 banks under our coverage within the limit. The Circular encourages early adoption of LCR and NSFR, moving closer to international standards (Basel III). Overall, compliance pressure on banks eases, creating room for interest rates to cool down going forward.

In detail, the Circular raises the LDR cap to 95%, revises its formula and officially introduces the Basel III ratios: LCR, NSFR and LEV.

LDR remains loans over deposits, but the denominator (D) is redefined towards stable funding. Deposits from other credit institutions (CIs) are excluded and replaced by net interbank borrowings. Bonds count only if they qualify as Tier 2 capital. In return, D now includes equity (net of fixed assets and equity investments), while State Treasury term deposits still count at only 20%.

LCR is the ratio of high-quality liquid assets (HQLA) to 30-day net cash outflows. Level 1 HQLA comprises cash, SBV deposits and government bonds, but not deposits at other CIs. Retail VND term deposits with over 30 days remaining are excluded from outflows if early withdrawal earns only the demand deposit rate.

NSFR is the ratio of available stable funding (ASF) to required stable funding (RSF). Equity and funding over 1 year are weighted at 100%, retail deposits at 90–95% and corporate deposits under 1 year at 50%, while CI funding under 6 months is excluded. Loans over 1 year carry RSF factors of 65–85%.

The LEV ratio (Tier 1 capital to total exposure) applies only if the SBV Governor so decides, instead of the 3% threshold in the draft.

Overall, the final Circular is more relaxed than the previous draft and phases in international standards via a roadmap, giving banks more time during the transition.

Although the new 95% LDR cap allows most banks to comply, we believe listed large banks are likely to fully meet (100%) the above liquidity ratios (LCR and NSFR) early and thereby be exempt from the LDR and the ratio of short-term funding for medium- and long-term lending. Meanwhile, smaller banks that cannot comply with the new standards early still have a fairly long transition period.

The relaxation versus the previous draft eases compliance pressure on banks, thereby creating room to lower interest rates and improve credit growth going forward.