What are regulations on loan-to-deposit ratio of commercial banks, cooperative banks and branches of foreign banks in Vietnam?

Pursuant to Article 21 of the Circular 36/2014/TT-NHNN (amended by Clause 19 Article 1 of the Circular 06/2016/TT-NHNN) stipulating regulations on loan-to-deposit ratio of commercial banks, cooperative banks and branches of foreign banks in Vietnam as follows:

- Commercial banks, cooperative banks and branches of foreign banks shall conform to the maximum outstanding loan-to-deposit ratio in Vietnamese dong, including Vietnamese dong and foreign currencies converted into Vietnamese dong (according to the inter-bank average exchange rate on a daily basis announced by the State Bank, or based on the exchange rate used in financial statements released by credit institutions and branches of foreign banks in case there is none of such inter-bank average exchange rate) at the percentage calculated according to the following formula:

LDR = ( L / D ) x 100%

Where:

+ LDR refers to outstanding loan-to-deposit ratio.

+ L refers to total amount of outstanding loans regulated in Clause 2 and 3 of the Circular 36/2014/TT-NHNN.

+ D refers to total amount of deposits regulated in Clause 4 of the Circular 36/2014/TT-NHNN.

- Total outstanding loan includes:

+ Loans taken out by individuals and organizations (exclusive of loans granted to other credit institutions and branches of foreign banks in Vietnam);

+ Entrusted loans granted by other credit institutions and branches of foreign banks.

- Total outstanding loan has to deduct:

+ Outstanding loan derived from the entrusted fund of the Government, other individuals or organizations (inclusive of credit institutions and branches of foreign banks in Vietnam, parent banks and foreign branches of parent banks);

b) Overseas loans of credit institutions and branches of foreign banks. In respect of branches of foreign banks, overseas loans shall include loans granted by parent banks and foreign branches of parent banks.

- Total deposits consist of:

+ Deposits made by foreign and domestic entities, except the followings:

++ All types of the State Treasury’s deposits;

++ Margin and special deposits of customers;

+ Personal deposits other than margin and special deposits.

+ Sums mobilized from the issuance of promissory notes, treasury bills, certificates of deposit, bonds.

- Credit institutions and branches of foreign banks (exclusive of financial and financial leasing companies) must maintain the loan-to-deposit ratio as follows:

+ State-owned commercial banks: 90%;

+ Cooperative banks: 80%;

+ Joint-stock commercial banks, joint venture banks and wholly foreign-owned banks: 80%;

+ Branches of foreign banks: 90%;

As regards credit institutions and branches of foreign banks that have been newly established, over first 3 years of their operations, the State Bank’s Governor shall determine specific ratio different from the above-mentioned ratios, applicable to each credit institution and branch of foreign banks.

- Foreign commercial banks, cooperative banks and bank branches shall not have to comply with loan-to-deposit ratio regulated in Clause 5 of this Article if the amount of charter capital, allocated funds retained after making investment in, purchasing fixed assets, contributing capital and buying stocks stays greater than the outstanding loan.

Above are regulations on loan-to-deposit ratio of commercial banks, cooperative banks and branches of foreign banks in Vietnam. Please refer to the Circular 36/2014/TT-NHNN for further information.

Best regards!