Vietnam Banking Sector Spotlight – 1H2026 Update: Credit Growth Accelerates as Liquidity Pressures Mount

Economic growth in Vietnam remains strongly bank-led, with flexible policy measures supporting the banking sector's lending capacity. As of 29 June 2026, system-wide credit reached VND 20.03 quadrillion, up 7.7% year-to-date (YTD).

However, as demand for medium- and long-term financing rises, rapid credit expansion is increasing pressure on banks to balance funding structures, maintain liquidity and manage risks.

FiinRatings' “Vietnam Banking Sector Spotlight – 1H2026 Update” report examines key developments in credit growth, asset quality and liquidity, alongside the implications of major policy and regulatory changes for the sector's credit outlook.

Key highlights:

🔹 Policy measures expand lending headroom, while credit remains concentrated in key sectors: Circular 25/2026 provides greater flexibility for medium- and long-term lending. Real estate credit accounts for 26.3% of system-wide credit, with real estate business lending rising 41% YoY, reflecting strong financing demand from sectors with long-term capital needs.

🔹 Fee income surges alongside growing off-balance-sheet credit exposures: While NIM narrowed to around 2.8%, fee income rose 49.7%, driven primarily by payments, letters of credit (L/Cs) and guarantees. Off-balance-sheet credit equivalent grew 24.3%, outpacing on-balance-sheet credit growth.

🔹 Asset quality remains broadly stable, but provisioning buffers are thinning: The NPL ratio held at around 1.9%, while LLR coverage declined to approximately 80%, its lowest level in five years. Banks' ability to contain asset quality deterioration and resolve NPLs will remain a key area to monitor in 2H2026.

🔹 Credit growth outpaces deposit mobilisation, intensifying liquidity pressures: System-wide credit grew 7.41% YTD, compared with 5.02% growth in customer funding, while the credit-deposit gap across 30 banks widened to VND 1,673 trillion. The sector-wide stable funding ratio fell to 95%, highlighting the growing need to diversify funding sources to sustain credit growth.

🔹 Credit profiles remain broadly stable, although divergence may widen: The median indicative credit rating across 30 banks remained at [A-], with 24 banks unchanged, three recording improvements and three showing weaker credit profiles. Banks with strong pre-provision operating profit, high CASA ratios, diversified funding sources and effective NPL resolution capabilities are expected to demonstrate greater resilience.

Funding Capacity Emerges as a Key Constraint on Credit Growth

As credit growth continues to outpace stable funding, banks' ability to secure long-term funding at reasonable costs will increasingly determine their capacity for further growth.

This challenge is becoming more pronounced as Circular 50/2026/TT-NHNN introduces Basel III liquidity requirements, including the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), with phased implementation beginning in 2028. These requirements are expected to encourage banks to diversify their funding sources through long-term bond issuance, syndicated loans and international capital markets.

Tapping these channels will depend on strong credit quality and transparent disclosure – key to building investor confidence and enabling the market to price risk and allocate capital more efficiently.

👉 READ THE FULL REPORT HERE

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