Vietnam bank profits diverge in Q1, favoring large lenders

The Vietnamese banking sector’s profits in Q1/2026 showed a clear divergence, with growth seen among large lenders with strong capital and asset quality while smaller banks facing mounting pressure from rising funding costs and credit risks.

In the group of four state-controlled banks (Big 4), Vietcombank led with pre-tax profit of VND11,832 billion ($448.93 million), up 5.42% year-on-year.

VietinBank recorded VND11,139 billion, surging 63.3%, making it the fastest-growing among state-controlled banks, while BIDV reported VND8,571 billion, up 16.1%.

Among private banks, MBBank posted VND9,628 billion ($365.3 million) in pre-tax profit, up 14.8%; and Techcombank VND9,531 billion (+22.5%). VPBank and HDBank stood out with growth rates of 58% and 46%, respectively, signaling a recovery in core business drivers after a challenging period.

Not only are profits growing in absolute terms, but the pace of fulfilling annual targets among large banks is also high. VietinBank has completed 33.75% of the year's plan, HDBank 30.54%, while most others around 24-25%.

In contrast, the picture for small and mid-sized banks shows significant volatility. Some reported exceptional growth, such as ABBank (+260%), PGBank (+187%), and BVBank (+170%), but this largely stemmed from a low base or extraordinary income, rather than sustainable operational improvements.

Meanwhile, several banks posted weaker results. Sacombank reported VND2,106 billion ($79.9 million) in pre-tax profit, down 43% year-on-year, reflecting pressure from legacy asset settlement and increased provisioning. Banks like SeABank and Eximbank are facing similar challenges as provisioning costs surge.

Scale and asset quality set the rules of the game

Q1 developments point to a structural shift in the banking sector: credit growth is being allocated more selectively. Banks with larger scale, strong capital foundations, or involvement in system restructuring tend to receive higher credit growth quotas, allowing them to sustain expansion.

Conversely, smaller banks or those with weaker asset quality face tighter credit room, making their performance more dependent on short-term factors such as one-off income or cost-cutting.

Do Minh Phu, chairman of TPBank, likened credit limits to “a blanket that isn’t wide enough to stretch,” highlighting the challenge of balancing regulatory compliance with growth and efficiency amid cautious monetary policy.

According to SSI Securities, banking sector profits in 2026 may continue to grow at double-digit rates, but divergence between bank groups will become more pronounced. Banks with strong capital bases and better credit expansion capacity are expected to have the upper hand.

Meanwhile, Vietcombank Securities noted that net interest margins (NIM) may come under pressure in the second half of the year due to intensifying competition for deposits, forcing banks to rely more on credit growth to sustain profits.

One of the core factors driving divergence is asset quality. As of the end of Q1/2026, large banks continued to maintain good control of non-performing loans (NPLs). For example, Vietcombank posted a NPL ratio of 0.62%, ACB 0.97%, VietinBank 1.02%, and BIDV 1.3%.

In contrast, smaller banks reported higher NPL ratios, including MSB (2.66%), SeABank (2.24%), and Sacombank (around 2.2%). Rising bad debt led to higher provisioning costs, directly eroding profits.

In fact, some banks significantly increased provisioning in Q1. Eximbank recorded a more than 150% year-on-year rise in provisioning expenses. Many others also stepped up provisions to address emerging bad debts and strengthen financial buffers.