Vietnam's Banking Sector Spotlight: Ambitious Credit Target hindered by Capital constraints and Margin pressure

Following the official launch of the “Vietnam Sector Spotlight Series,” FiinRatings now turns its attention to the Banking Sector – a cornerstone of Vietnam’s credit market. This report provides a recap of 2024 and offers an outlook for 2025, featuring key drivers, updates on credit metrics, financing demand, and insights into credit ratings and bond pricing.

Following the official launch of the “Vietnam Sector Spotlight Series,” FiinRatings now turns its attention to the Banking Sector – a cornerstone of Vietnam’s credit market. This report provides a recap of 2024 and offers an outlook for 2025, featuring key drivers, updates on credit metrics, financing demand, and insights into credit ratings and bond pricing.

Key Highlights of the Report:  

🔹Retail credit rebound: Strong growth amid regulatory changes and market consolidation, led by private banks and top-tier JSCBs. 

🔹Credit growth outlook: Expected 15-16% in 2025, driven by public investment and industrial expansion. 

🔹Bank bond issuance surge: 70.7% YoY increase in 2024 to boost Tier 2 capital, with 2025 focus on external capital sources. 

🔹Profitability pressures: Higher write-offs and reserves may impact on short-term profits but manage long-term capital risks. 

🔹Liquidity risk rise: Loan growth continued to outpace deposits, increasing wholesale funding reliance and heightening liquidity risk with funding pressures. 

🔹Credit quality divergence: Median credit score remains at [a-], but with greater differentiation among banks. A further divergence is expected in 2025. 

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Vietnam's Sector Spotlight Series: A comprehensive series by FiinRatings offering data-driven analysis and insights into key trends, major driving factors, financial & credit performance; and capital market activity review across Vietnam's key economic sectors.   

This report is available for free upon registration. We are happy to help investors invest with confidence in Vietnam’s capital market via our on-demand services including KYC, credit assessment, due diligence, and other transaction-related support works. 

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