Deposit versus lending-led expansion across the world's largest banks differs sharply. Between 2022 and 2024, more than half of the institutions in the TAB Global 1,000 Largest Banks Ranking expanded their loan books at a pace that consistently outpaced deposit growth — a credit-led expansion shaped by post-pandemic demand recovery, policy-driven growth mandates and, in several markets, excess liquidity built up during the quantitative easing era.

A meaningful number of banks ran the opposite dynamic: deposits growing faster than loans is not necessarily a restraint on lending, but often a structural reflection of weak borrowing demand in their home markets or a bank’s business model.

The distribution (Figure 1) points to a light skew towards credit-led growth, indicating that the banking system represented by the world's largest banks is not fundamentally imbalanced between funding and lending. Rather, it is marginally tilted, with the bias reflecting a modest shift in system-wide credit positioning. Looking at the centre of the distribution, the 45% of banks in the −5% to +5% range are broadly balanced in their deposit-credit growth, and their funding metrics support this: a median loan-to-deposit ratio (LDR) of 83% and a net stable funding ratio (NSFR) of 127%, both pointing to a resilient funding structure and liquidity buffer. Balanced growth remains the norm among the world's largest banks.

Outside this cohort, credit-led expansion with a steep negative deposit gap indicates who is running the imbalance. But LDR, the proportion of a bank's loan book funded by deposits, and NSFR, the proportion of a bank's funding that is considered stable over a one-year horizon relative to its asset profile, determine which banks increasingly face funding pressure and vulnerabilities. The answer differs materially by market, institution type and the degree to which the gap between deposit growth and loan growth is accompanied by deteriorating funding structure and liquidity buffers.

Strong deposit growth paired with weak loan growth often signals soft credit demand, not a shift to a flow-based business model

There are three main catalysts for banks showing a deposit-growth surplus, as shown in the blue zone in Figure 1. First, they are strategically shifting balance-sheet structure towards liquidity deployment rather than loan extension, and earnings are increasingly being carried less by lending spreads and more by flows, including deposits, wealth assets, distribution, payments and market activity. Second, deposit-led expansion is part of their business model, as in the case of Japan Post Bank, which had a huge deposit surplus between 2022 and 2024. In most cases, however, we believe these trends are less a strategic shift from lending to deposits than the result of a weak economy, shifting the balance-sheet structure towards liquidity deployment rather than loan extension. This is visible across a selected group of banks found in this zone: Commerzbank, Deutsche Bank, CaixaBank, Bank of Beijing, HSBC Hong Kong (HSBC HK) and Bank of China Hong Kong (BOCHK).

Across these six banks, the issue was less a strategic deposit-centric focus than a structural mismatch between deposit inflows and viable credit demand. Commerzbank and Deutsche Bank face weak German corporate borrowing as energy costs and export pressure suppress capital expenditure. CaixaBank is exposed to slower Spanish mortgage origination after ECB rate hikes hit affordability, while Bank of Beijing is constrained by China's property-sector deleveraging. Deposits are therefore growing faster than productive lending opportunities, leaving the group with an average LDR of 72% — with European banks around 80–83% and HSBC Hong Kong and BOCHK much lower at 52% and 61%.

What connects them at a structural level is strong funding and liquidity. Basel III's liquidity coverage ratio (LCR) and NSFR incentives stable, deposit-funded balance sheets. The group's average LCR of 167%, led by CaixaBank at 207% and BOCHK at 201%, sits well above the 100% minimum, while the average NSFR of 138% confirms stable long-term funding across the peer group.

HSBC HK and BOCHK come close to show a deposit-to-wealth-management flow model most clearly. Both recorded a 13-percentage-point gap between deposit and loan growth as the dollar peg imported the Federal Reserve's tightening cycle, weakening mortgage demand between 2022 and 2024, while strong mainland wealth inflows boosted deposits. With LDRs in the low 50s and 60s, both banks now resemble less a credit intermediary than a wealth management platform — putting pressure on recycling excess funding into fee-generating wealth assets, interbank markets, securities and treasury operations. Net fee income from BOCHK's insurance, fund management and distribution alone grew by a compound annual growth rate of 19% between 2022 and 2025.

Credit-led growth can widen deposit gaps without implying funding stress

The negative deposit gaps, where credit grows faster than deposits (red zone in Figure 1), and the banks most prominently represented within those ranges, do not automatically reflect signs of stress. Banks can deliberately grow credit faster than deposits for several reasons. Some entered 2022–2024 with excess liquidity and unusually low loan-to-deposit ratios, giving them room to deploy balance-sheet capacity built up during the pandemic. Large, highly rated banks in the US, UK and eurozone may also choose to manage retail deposits as a margin line rather than a volume target, funding incremental loan growth through covered bonds, senior unsecured issuance or securitisation instead.

In emerging high-growth markets such as the Middle East and Asia, the loan-deposit gap also reflects policy-driven credit growth, particularly at state-owned banks with implicit sovereign support. The burden is less evenly distributed in markets such as Vietnam, where smaller private banks lack both the deposit trust enjoyed by state-owned peers and the capital markets access available to developed-market banks, forcing them to compete more aggressively for retail and corporate deposits.

Higher interest rates from 2022 reinforced this credit-first posture, as loan yields repriced faster than deposit costs in many markets. Monetary conditions also distorted the gap: pandemic-era QE expanded bank balance sheets and lowered LDRs, while subsequent quantitative tightening reduced commercial bank deposits independently of lending activity.

Overall, wholesale funding remains more sensitive to changes in credit perception and interest rate conditions than customer deposits. It is against this backdrop that retail deposits from households and businesses retain their premium status in any sustainable funding strategy. Stable in behaviour, often insured and less rate-elastic than wholesale alternatives, they represent the highest-quality liability a bank can hold — and the one most difficult to replicate at scale once lost. Customer deposits as a share of total liabilities contribute more than 73% to 80% for leading banks.

Loans are outpacing deposits at a small group of banks, pushing up LDRs

While most banks with a credit-growth surplus have comfortable LDRs in the range of 40% to 90% and good NSFR above 110%, 39 banks in the TAB Global 1,000 Largest Banks Ranking diverge sharply from this, including banks from Vietnam and Saudi Arabia.

Banks in Vietnam have been growing loan books materially faster than deposits, widening the structural funding gap, with loan-to-deposit ratios rising from 90% in 2020 to 104% in 2024 across 23 of the largest banks. Their average weighted credit growth between 2022 and 2024 reached 36%, while deposit growth was 31%.

Around 74% of all 23 Vietnamese banks represented in the World's 1,000 Largest Banks show higher credit than deposit growth between 2022 and 2024. Among those with a negative deposit-to-credit growth difference, the highest negative gap is concentrated among smaller banks with assets of $6 billion to $44 billion. For those banks, strengthening CASA ratios through digital acquisition is a strategic priority, although depositor confidence remains a constraint following the Saigon Commercial Bank (SCB) fraud scandal, which involved a smaller bank with assets of about $30 billion at end-2021. The exception to these challenges is a pool of mid-tier to small digital-first and relationship-driven banks that grew deposits and loans in a balanced or deposit-centric way between 2022 and 2024, including HDBank (103% deposit growth vs 67% loan growth), Bac A Commercial Bank (27%, 16%), Southeast Asia Bank (46%, 36%), Saigon Thuong Tin Commercial Bank, VPBank, Vietnam International Bank and Techcombank.

The key risks for the banking sector that have been visible since the pandemic remain in place: rapid loan growth continues to outpace deposit growth, LDRs are elevated, funding buffers are thin, and asset-quality risks persist, especially around property-related exposures and consumer finance loans in retail banking.

The planned removal of Vietnam's credit-growth cap from 2026 could further support lending but may also intensify these funding and credit-quality pressures. In August 2025, the Prime Minister directed the SBV to abolish the quota system from 2026. Banks will for the first time compete on risk-adjusted pricing, capital efficiency and credit underwriting quality, not on the allocation of a centrally assigned quota. This will favour institutions with superior risk models and stronger capital adequacy, giving them a structural competitive advantage. Weaker smaller banks that have historically relied on quota allocations for growth will face a competitive disadvantage, likely having a positive effect on deposit-credit growth imbalances.

Vietnam's new capital rules will come into force from 1 January 2030, bringing banks closer to Basel III standards through CET1 and Tier 1 minimums, alongside capital conservation and countercyclical buffer requirements.

Deposits as relationship anchors, not just funding sources

The more fundamental strategic reappraisal that many institutions have yet to make is how to look at funding as an important starting point to build customer relationships. For much of the post-global financial crisis period, deposits were managed primarily as a funding mechanism, a source of balance-sheet liquidity to underpin loan growth. That framing alone is proving structurally insufficient.

Leading institutions are increasingly treating the deposit franchise as the entry point to a broader customer relationship and as the primary channel through which wealth products, investment services and protection are distributed. The strategic logic is straightforward: a client whose income flows through the bank is a client whose financial needs can be served holistically. Banks with strong primary account and payroll relationships carry not only more stable funding, but structurally higher cross-sell revenue and lower churn.