Vietnam Banks Q2 2026 Profit Up 25%, VCB Leads; Valuations at 1.2x P/BV

Overview

Vietnam’s banking sector reported a strong Q2 2026, with aggregate net profit after tax attributable to parent shareholders rising 25% year-on-year to VND 88 trillion. The growth was driven by NIM expansion, robust credit growth, and improved operating leverage, though asset quality indicators are deteriorating. Vietcombank (VCB) was a standout performer, with profit up 65% YoY, while sector valuations remain attractive at 1.2x P/BV.

Key Facts

• Q2 2026 sector net profit (PATMI) reached VND 88 trillion, up 25% YoY and 18% QoQ.
• 18 banks recorded profit growth, 6 declined, and 3 were flat YoY.
• VCB’s other net income surged 374% QoQ and 252% YoY to VND 4,100 billion, mainly from bad-debt recoveries; provision expenses fell 80% QoQ and 38% YoY to VND 503 billion.
• VCB’s PATMI grew 65% YoY; excluding VCB’s exceptional other income, sector growth would still be +20% YoY.
• Sector NIM improved to 3.15% (+16 bps QoQ); credit growth reached +9.2% YTD.
• Adjusted CIR fell to 31.3% (-2.1 ppts YoY); fee income rose to 14.2% of adjusted revenue (+4.2 ppts YoY).
• NPL ratio was flat at 2.01%, but watch-list loans (Group 2) rose 14 bps QoQ to 1.38%; loan loss coverage (LLR) fell to 79%, the lowest since Q2 2018.
• Only 4 banks (VCB, CTG, TCB, ACB) have LLR above 100%; 5 banks (STB, VPB, MSB, HDB, VIB) have LLR below 60%.
• Sector 2026E P/BV is 1.2x with ROE of 17%.

What Happened

According to a report by Yuanta Securities, the Vietnamese banking sector delivered robust Q2 2026 results, with aggregate profit after tax for parent shareholders rising 25% year-on-year to VND 88 trillion. The growth was broad-based, with 18 of 27 banks reporting profit increases. The most notable swing factor was Vietcombank (VCB), which recorded VND 4,100 billion in other net income—up 374% quarter-on-quarter and 252% year-on-year—primarily from bad-debt recoveries. VCB also cut provision expenses by 80% quarter-on-quarter to VND 503 billion, contributing to its 65% year-on-year profit surge. Excluding VCB’s exceptional other income, the sector would still have grown 20% year-on-year.

The report attributes the sector’s performance to three main drivers: NIM expansion (up 16 bps QoQ to 3.15%) from longer loan tenors and a shift to higher-yield lending; strong credit growth of 9.2% YTD; and improved operating leverage, with the adjusted CIR down 2.1 percentage points to 31.3% and fee income up 4.2 percentage points to 14.2% of adjusted revenue.

Market Context

Vietcombank (VCB) closed at VND 60,000 on August 25, 2026, up 0.51% on the HOSE, while other major banks like TCB (VND 31,000, -0.32%), MBB (VND 21,000, flat), and ACB (VND 22,000, -0.44%) showed mixed performance. The sector’s P/BV of 1.2x with ROE of 17% suggests valuations are below historical averages, but asset quality concerns are emerging. The decline in LLR to 79%—the lowest since Q2 2018—and rising watch-list loans indicate potential stress ahead, especially if interest rates stay elevated.

Strategic Significance

For long-term investors, the banking sector’s earnings momentum is positive, but the quality of growth is under scrutiny. VCB’s exceptional gains from debt recoveries are non-recurring, and the sector’s reliance on NIM expansion and credit growth may face headwinds from rising asset quality risks. The divergence in LLR coverage—with only four banks above 100%—highlights a competitive advantage for VCB, CTG, TCB, and ACB, which have stronger balance sheets. Banks with LLR below 60% (STB, VPB, MSB, HDB, VIB) may need to raise provisions, pressuring future earnings. The narrowing CASA gap among top banks also suggests that low-cost deposit advantages are eroding, which could impact NIM sustainability.

What to Watch

• Q3 2026 earnings reports for VCB, TCB, MBB, and ACB to see if profit growth is sustainable without one-off gains.
• NPL and watch-list loan trends in the coming quarters; a continued rise in Group 2 loans could signal deteriorating asset quality.
• LLR ratios: whether banks rebuild coverage or continue to let them decline.
• Credit growth trajectory: whether the 9.2% YTD pace continues, and if the SBV adjusts credit quotas.
• Interest rate movements: higher rates could increase NPLs and pressure NIMs.