KEY HIGHLIGHTS

• Q1/2026 earnings performance of the 27 listed banks continued to maintain growth momentum, with sector-wide profit before tax increasing by approximately 14% YoY. However, the quality of growth became more clearly differentiated across banking groups.
• Credit growth outpaced deposit growth: outstanding loans of the 27 listed banks increased by 3.58% YTD in Q1/2026, while funding mobilization rose by only around 0.6%, adding pressure on liquidity, cost of funds (COF), and net interest margin (NIM).
• Deposit rates increased in Q1/2026 and only started to cool down from early April under the State Bank of Vietnam’s guidance to stabilize interest rates. Nevertheless, room for a reduction in funding costs in the near term remains limited.
• The draft amendment to Circular 22/2019/TT-NHNN reflects the SBV’s efforts to regulate banking activities more flexibly in a new and more challenging environment, while also enhancing the quality of governance across the banking system, including funding quality, liquidity, and capital buffers. CDR, LCR, NSFR, and LEV are key ratios to monitor.

BANKING SECTOR OUTLOOK ASSESSMENT

• System-wide credit is expected to continue expanding in 2026, with growth guidance of around 15%–16% YoY. However, actual growth may be flexibly managed by the SBV depending on inflation, exchange rate movements, system liquidity, and macroeconomic stability, in line with recent official remarks.
• Banking sector earnings are still expected to grow, but at a slower pace, as NIM remains under pressure from COF and deposit competition. We believe NIM is likely to see a more meaningful improvement only from late 2026, when the funding environment becomes more stable and earning assets are more fully repriced.
• The draft amendment to Circular 22/2019/TT-NHNN and new capital regulations such as Circular 14/2025/TT-NHNN will raise system-wide prudential standards while further widening differentiation among banks. Banks with strong CASA, stable funding, thick Tier 1 capital buffers, and high provisioning buffers should enjoy a relative advantage.