Vietnam Banks' NPLs Rise Faster Than Credit Growth in H1 2026

Overview

Vietnamese banks’ first-half 2026 financial reports reveal a worrying trend: non-performing loans (NPLs) are growing at a much faster pace than credit expansion. MB (HOSE: MB) saw its NPL ratio rise to 1.45% from 1.29% at end-2025, with the most severe category—group 5 loans—jumping 36.2%. This sector-wide deterioration, coupled with liquidity strain, is pressuring deposit rates and could impact bank profitability.

Key Facts

• MB’s consolidated loan book reached VND 1,227,554 billion as of June 30, up 13.2% from end-2025.
• MB’s total NPLs (groups 3, 4, 5) rose 26.8% to VND 17,797 billion, roughly double the credit growth rate.
• MB’s NPL ratio increased to 1.45% from 1.29%, while group 5 loans (loss) surged 36.2% to VND 8,747 billion.
• MB’s group 3 (substandard) loans rose 41% to VND 4,622 billion; group 2 (special mention) loans increased 17.4% to nearly VND 12,000 billion.
• Combined problem assets (group 2 plus NPLs) at MB reached ~VND 29,800 billion, equivalent to 2.4% of total loans.
• Techcombank (TCB) added VND 972 billion in NPLs in H1, a ~12% increase, keeping its NPL ratio at 1.1%.
• KienlongBank (KLB) saw group 5 loans rise nearly 25%, now over 55% of its total NPLs; Bac A Bank (BAB) reported NPLs up 5.9% to VND 1,540 billion.

What Happened

According to the banks’ first-half 2026 financial statements, asset quality is deteriorating across the sector. At MB, the NPL ratio climbed to 1.45% as of June 30, with the sharpest rise in the most toxic category—group 5 loans, which increased 36.2% to VND 8,747 billion. Group 3 loans also rose 41%, while group 4 remained flat. The bank’s total problem assets, including group 2, reached nearly VND 29,800 billion, or 2.4% of total loans.

Other banks show similar trends. Techcombank added VND 972 billion in NPLs, a 12% increase, though its NPL ratio stayed at 1.1%. KienlongBank’s group 5 loans grew nearly 25%, now representing over half of its NPLs. Bac A Bank’s NPLs rose 5.9% to VND 1,540 billion. While most banks remain below the State Bank of Vietnam’s 3% NPL threshold, the rapid buildup in groups 2 and 3 is a warning sign for future quarters.

Market Context

MB’s stock trades on HOSE, while TCB is also on HOSE, and KLB and BAB are on UPCOM. Recent price action shows TCB closing at VND 29, up 1.38% on August 3, 2026, with volume of 1,142,500 shares. The sector faces dual pressures: rising NPLs and a liquidity squeeze. According to Đào Minh Tú, Vice Chairman of the Vietnam Banks Association, credit demand is outpacing deposit growth, forcing banks to raise deposit rates, which could compress net interest margins. VCBS Securities warns that NPL risks in 2026 require close monitoring.

Strategic Significance

For long-term investors, the key concern is that NPL formation is accelerating faster than credit growth, indicating that the quality of new lending is deteriorating. The rise in group 2 and 3 loans suggests more NPLs may materialize in coming quarters. Additionally, the liquidity imbalance—credit growth outpacing deposits—puts upward pressure on funding costs, squeezing margins. Banks with stronger capital buffers and better asset quality management, such as TCB, may be more resilient, while smaller banks like KLB and BAB face higher vulnerability. The expiry of Resolution 42 on bad-debt resolution adds further complexity to recovery efforts.

What to Watch

• Q3 2026 earnings reports for MB, TCB, KLB, and BAB, due by October 2026, to see if NPL trends persist.
• Deposit rate movements across the banking system, as liquidity pressure could force further hikes.
• Any new regulatory measures to replace Resolution 42 for bad-debt handling.
• Credit growth data from the State Bank of Vietnam for Q3 2026, to assess whether loan expansion continues to outpace deposit mobilization.
• Updates on MB’s group 2 and 3 loan migration into NPLs in subsequent quarters.