Vietnam Banks: High Rates Squeeze NIMs as VCB Profit Stalls

Overview

SSI Research reports that pre-tax profit across its Vietnamese bank coverage reached VND 89.1 trillion, up 18.9% year-on-year but down 6.9% quarter-on-quarter. Vietcombank (VCB), listed on HOSE, saw profit flat year-on-year and down 36% quarter-on-quarter after an exceptional second quarter and unusual third-quarter provisioning, losing its sector profit lead to VietinBank (CTG). The brokerage expects elevated interest rates to persist, pressuring net interest margins while asset quality deteriorates.

Key Facts

• Sector pre-tax profit of VND 89.1 trillion, +18.9% YoY and -6.9% QoQ, per SSI Research.
• State-owned commercial banks fell 16.5% QoQ; VCB profit flat YoY and down 36% QoQ.
• BID +39% YoY and CTG +29% YoY; CTG overtook VCB as sector profit leader.
• Joint-stock banks: TPB +57%, MBB +42%, MSB +27%, TCB +26% YoY; STB -52% YoY; HDB +9% YoY but -27% QoQ.
• Sector NPL ratio rose to 2.09%; bad-debt coverage fell to 77%.
• Total deposits +12.8% YTD; certificates of deposit +41% YTD.
• Credit +3.4% QoQ and +12.8% YTD; non-interest income +25% YoY but -2% QoQ.

What Happened

SSI Research’s sector note, summarised in Vietnamese financial media, said profit growth decelerated from the prior quarter largely because of the high base set by state-owned commercial banks, whose combined profit fell 16.5% QoQ. VCB’s result reflected an exceptional second quarter followed by unusual third-quarter provisioning, which allowed CTG to take the sector profit lead. Among joint-stock banks, TPB, MBB, MSB and TCB all grew faster than the sector average, while STB remained the weakest performer with profit down 52% YoY.

The report also flagged a continued shift in credit allocation away from real-estate developers, home loans and financial services toward construction and retail, supported by public investment. Deposits recovered, with certificates of deposit rising fastest because they are not subject to the deposit-rate cap and support Basel III adoption. Asset quality worsened, with the sector NPL ratio at 2.09% and coverage at 77%, concentrated in mid-sized joint-stock banks. SSI Research expects home-loan NPLs to rise further as floating rates reset to 12-15%, adding provisioning pressure in coming quarters.

Market Context

VCB closed at 55 on 4 November 2026 on HOSE, with volume of 1,434,800 shares. BID closed at 32,450 and CTG at 31,050, while TPB closed at 12,750. The note lands as Vietnamese bank shares trade on divergent earnings trajectories: state-owned lenders face a high-base normalisation, while faster-growing joint-stock banks absorb higher funding costs. Net interest margin trends are diverging, with margins edging up at state-owned banks but narrowing at fast-growing joint-stock banks where funding costs rise faster than asset yields.

Strategic Significance

The core thesis for investors is margin compression combined with rising credit costs. Banks that can reprice loans quickly, particularly those repricing home-loan rates, are protecting margins; those funding rapid credit growth with costlier deposits are not. The 77% coverage ratio leaves a thinner buffer against the expected wave of home-loan stress at floating rates of 12-15%, meaning provisioning could absorb a larger share of pre-tax profit in coming quarters. VCB’s loss of the profit lead illustrates how a single quarter of elevated provisioning can reset sector rankings, and the migration of credit toward construction and retail signals where loan growth, and eventually asset-quality risk, is accumulating.

What to Watch

• Q4 and full-year 2026 earnings releases from VCB, CTG, BID and the joint-stock banks.
• Monthly SBV credit and deposit growth data for confirmation of the 12.8% YTD trend.
• Disclosure of home-loan floating-rate resets to the 12-15% range and any resulting NPL formation.
• Sector NPL ratio and coverage updates, particularly at mid-sized joint-stock banks.
• Deposit-rate and certificate-of-deposit pricing as a proxy for funding-cost pressure on NIMs.