Vietnam Banks "NIM faces headwinds, Fee income steps up" Rawat

Research evidence excerpt

Vietnam Banks "NIM faces headwinds, Fee income steps up" Rawat

Global Research

20 May 2026ab

Vietnam Banks Equities

VietnamNIM faces headwinds, Fee income steps up

Banks

Aakash Rawat, CFA

NIM weighed by higher funding costs Analyst

Vietnam banks delivered a soft Q1, with four earnings misses (TCB, MBB, VPB, ACB) and aakash.rawat@ubs.com

one in line (VCB), primarily driven by larger-than-expected NIM compression of 23bps q/ +65-6495 8283

q on average. Funding costs rose 40bps q/q, marking the seventh consecutive quarter of Benjamin Tan

increase (Figure 13Fundingcostsq/qchange), reflecting persistently tight system liquidity that has pushed up both Analyst

interbank and deposit rates. Credit growth, which continues to outpace deposit growth, benjamin.tan-yx@ubs.com

provided little support. Although higher asset yields (+13bps q/q), mainly due to loan +65-6495 3239

mix shifts, offered some relief, this was insufficient to fully offset funding cost pressures.

Looking ahead, our base case assumes broadly stable NIM in Q2, followed by a more

meaningful recovery in 2H, in line with guidance from the banks. This view is supported

by several datapoints: April deposit and interbank rates remain elevated but have eased

slightly versus March, suggesting some moderation in funding pressure, likely aided by

government efforts to lower deposit rates; Circular 08/2026, which permits the

inclusion of 20% of treasury deposits in LDR calculation, should provide marginal relief

to funding costs; and continued loan mix shifts toward longer-tenor loans should

support asset yields. Key risks to this outlook include a persistent further tightening of

liquidity conditions and ongoing government pressure on banks to lower lending rates

to support economic growth (link).