KEY HIGHLIGHTS

In 1H2026, the banking system recorded 7.41% YTD credit growth, while deposits at credit institutions increased by 5.02% YTD. Strong credit demand, driven by economic growth, alongside the widening gap between credit and deposit growth, resulted in a rapid increase in both lending and deposit rates during 1H2026.

The developments in credit, deposits, and interest rates during 1H2026 were reflected in the earnings performance of listed banks as follows:

• Credit growth outpaced deposit growth across 28 banks: Total loans at the 28 banks increased 18.2% YoY, while customer deposits rose 11.9% YoY. Market-based funding sources, including deposits/borrowings from other credit institutions and valuable papers, grew rapidly and accounted for nearly 29.7% of total key funding sources, making funding costs more sensitive to market interest rates and liquidity conditions.
• NIM remained under pressure: TTM earning-asset yield recovered by approximately 32 bps from 2025, but funding costs increased by nearly 60 bps, resulting in a 9-bp decline in NIM to 2.92%. Circular 25 and adjustments to the LDR calculation methodology could ease funding pressure in 2H2026, although the extent of the benefit will depend on each bank’s maturity structure, CASA ratio, and ability to self-fund credit growth.
• Profit growth remained highly differentiated across banks: PBT of the 28 listed banks reached VND206.2tn in 1H2026, up 19.6% YoY. In 2Q2026 alone, PBT increased 24.5% YoY and 17.2% QoQ. VPB, VCB, CTG, MBB, and TCB contributed approximately 87.7% of the sector’s incremental PBT, indicating that the overall sector growth rate does not fully reflect the uniformity or quality of earnings growth across individual banks.
• 1H2026 TOI increased 16.8% YoY, driven by 17.1% YoY growth in NII and 57.6% YoY growth in fee income. In contrast, FX income and securities trading income declined.
• Asset quality remained manageable, although early signs of deterioration emerged in Stage 2–5 exposures: The sector NPL ratio stood at 2.02% in 2Q2026, while the absolute NPL balance increased 17.2% YTD. Stage 2 loans rose 28.3% YTD, with the Stage 2 ratio increasing by 20.8 bps from end-2025.

2H2026 OUTLOOK

• We expect credit growth to remain elevated in 2H2026, supported by strong funding demand from the economy and policy adjustments aimed at supporting medium- to long-term lending.
• NIM should gradually stabilize, but recovery is unlikely to be uniform across banks. Banks with high CASA ratios, deposit growth broadly in line with loan growth, and lower reliance on market-based funding are better positioned. Conversely, banks with a large gap between loan and deposit growth will continue to face funding cost pressure.
• 2H2026 earnings will be differentiated by three key drivers: (i) the ability to sustain TOI growth, supported by both NII and NFI, particularly service fee income and cross-selling; (ii) cost efficiency, reflected in CIR improvement; and (iii) provisioning requirements and the migration of loans across asset-quality groups.

Note: Sector data in this report are primarily aggregated from 28 listed banks.