HÀ NỘI — Credit growth in Việt Nam’s banking sector has continued to outpace deposit growth, placing increasing pressure on system liquidity, analysts have said.

In a recent report on the banking industry for 2026, analysts at FiinRatings noted that credit growth of 19 per cent last year continued to far exceed deposit growth of 11.4 per cent and remained above the State Bank of Vietnam’s 15 per cent average target in previous years.

The strong expansion in lending was driven by infrastructure investment, industrial production supported by foreign direct investment inflows, a recovery in the real estate market and improving retail credit demand.

FiinRatings forecasts credit growth in 2026 will be lower than in 2025, as the current credit-to-GDP ratio remains high at over 140 per cent. The analysts said new State Bank of Vietnam regulations on credit growth limits for the real estate sector in 2026 are expected to slow lending to property developers.

They added that Basel III capital requirements and the gradual easing of credit quotas will likely lead to clearer differentiation in lending capacity among banks. Large banks with strong capital buffers are expected to expand market share while smaller lenders may need to moderate growth to balance capital, profitability and asset quality.

The report also said banking sector profits are expected to remain stable in 2025 despite narrowing net interest margins, with a growing shift towards non-interest income to support earnings.

According to analysts, profitability is being pressured by rising funding costs, asset quality concerns and tighter liquidity conditions.

The net interest margin of the banking sector is estimated to fall to around 2.9 per cent in 2025 from a peak of 3.8 per cent in 2022, leading to a slight decline in return on assets to around 1.4 per cent despite support from non-interest income and improved cost efficiency.

"In 2026, NIM is likely to remain below 3 per cent as funding costs increase amidst increasingly fierce competition for capital," said the analysts forecast.

The pressure on funding costs is closely linked to liquidity conditions. Credit growth has continued to outpace deposit growth by a wide margin, forcing banks to rely more heavily on interbank borrowing and bond issuance.

Liquidity indicators are weakening, reflecting the strain of sustaining high lending growth. As a result, deposit interest rates have begun to rise since the end of 2025 and may continue increasing in 2026, particularly for longer-term deposits. This is expected to further compress margins and prompt banks to adjust capital structures towards greater stability.

Based on these factors, profit prospects for 2026 are expected to diverge significantly, with capital strength, liquidity and income composition becoming key determinants of performance.

In particular, the group of four large private commercial banks is likely to maintain more stable net interest margins thanks to strong current account savings account (CASA) ratios and established customer ecosystems, supporting return on assets above the sector average although below previous peaks.

By contrast, State-owned banks are expected to face downward pressure on margins due to continued policy-driven interest rate support, with profit growth increasingly reliant on foreign exchange, gold trading and debt recovery.

Meanwhile, other commercial banks are likely to see the widest divergence in performance depending on their ability to expand retail lending and develop non-interest income streams. — BIZHUB/VNS