Vietnam Banking Stocks: NSI Sees 50bps Rate Rise, Q1 Profit Up 13.6%

Overview

National Securities (NSI) forecasts a 50 bps rise in Vietnam’s interest rates due to mounting liquidity pressure, while Q1 2026 banking sector revenue and profit grew 20.2% and 13.6% respectively. However, seven small and mid-sized banks reported negative profit growth. Banking stocks, including VPB, HDB, and MBB, are trading near historical low P/B valuations, presenting potential opportunities for banks with strong credit growth and asset quality.

Key Facts

• NSI expects interest rates to rise by 50 bps due to increasing system liquidity pressure.
• Q1 2026 total net revenue of 27 listed banks reached VND 357,765 billion, up 20.2% YoY.
• Q1 2026 after-tax profit of 27 listed banks reached VND 77,338 billion, up 13.6% YoY.
• Seven small and mid-sized banks recorded negative profit growth due to higher capital costs, squeezed liquidity, and rising provisioning pressure.
• Interbank interest rates spiked above 17% per annum at times in Q1 2026.
• Banking stocks are trading at an average P/B of 1.5x, near the historical low of STD-1.
• NSI identifies three catalysts: credit growth, NIM recovery, and asset quality improvement.

What Happened

In its latest banking sector outlook, National Securities (NSI) forecasts that the general interest rate level will edge up by about 50 bps in the coming period due to increasing system liquidity pressure. The main cause is the widening gap between credit growth and deposit mobilization, as loan disbursement is promoted but lending rates must remain low to support the economy. This tension pushed interbank rates above 17% per annum at times in Q1 2026.

NSI notes that the State Bank of Vietnam’s (SBV) directive to reduce deposit rates after its April 9 meeting inadvertently intensified the competition for deposits, creating heavier mobilization pressure for small and mid-sized banks. Meanwhile, Q1 2026 earnings results for 27 listed banks showed 20 banks with positive growth, with total net revenue up 20.2% and after-tax profit up 13.6% YoY. However, seven banks recorded negative growth, mainly mid-sized and small commercial banks.

Market Context

On the stock market, after a correction in April 2026, banking stocks are trading around an average P/B of 1.5x, approaching the STD-1 level. This valuation level has returned to historical lows, suggesting room for expansion. On May 31, 2026, VPB closed at VND 27,100 (-0.73%), HDB at VND 25,900 (+0.19%), and MBB at VND 25,000 (unchanged). All three are listed on HOSE. The sector’s P/E is also near STD-1, indicating that banking stocks may be undervalued relative to history.

Strategic Significance

For long-term investors, the current low valuation provides a potential entry point for banks with strong credit growth and asset quality. NSI highlights three drivers: sustained credit growth supported by government and SBV policies, net interest margin (NIM) recovery as lending rates stabilize, and improving asset quality as provisioning pressure eases. Banks like VPB, HDB, and MBB, which are expanding operations and have robust capital buffers, are well-positioned to benefit. The divergence between large and small banks underscores the importance of selecting institutions with competitive advantages in funding and risk management.

What to Watch

• SBV policy meeting minutes and any further rate guidance.
• Q2 2026 earnings reports for VPB, HDB, and MBB, due in July 2026.
• Credit growth data for the banking sector in June 2026.
• Interbank interest rate trends, particularly if they remain above 15%.
• Any regulatory changes to deposit rate caps or reserve requirements.