Vietnam banking sector shows positive outlook for 2025: VinaCapital
Vietnamese bank stocks significantly outperformed the VN-Index in 2024, and strong performance is expected this year, given the low valuation of bank stocks (1.3x P/B vs 16% ROE), write chief economist Michael Kokalari and senior bank analyst Thuy Anh Nguyen at VinaCapital.

Michael Kokalari, chief economist of VinaCapital. Photo courtesy of the company.
Bank stocks account for 40% of the VN-Index and vastly outperformed the benchmark index in 2024. The 18 banks listed on the Ho Chi Minh Stock Exchange surged 26% in VND terms vs 12% for the VN-Index.
We believe the sector will deliver a strong performance again this year, partly because we expect sector-wide bank earnings growth to accelerate from 14% in 2024 to 17% in 2025, as the main drivers of Vietnam’s GDP growth shift from exports and tourism in 2024 to consumption, infrastructure spending, and real estate in 2025.
Earnings growth acceleration, coupled with attractive valuations (1.3x P/B versus 16% ROE), should drive further stock price appreciation.
The performance of individual bank stocks in Vietnam varies considerably, creating ample opportunities for active managers to outperform the broader stock market. The wide range of stock price performance reflects the widely varying business strategies, risk profiles, and valuations of banks in Vietnam.
We discuss the current thinking of VinaCapital’s portfolio managers and research team on bank stock selection below, as well as how our outlook for Vietnam’s economy, which was discussed in our Looking Ahead at 2025 report, informs our current stock picking strategy.

In short, we expect Vietnam’s export growth to the U.S. to plunge this year, which should be offset by increases in infrastructure spending, real estate development activity, and consumer spending.
Slower export growth will weigh on GDP growth because exports are nearly 100%/GDP, but most of Vietnam’s exports are produced by FDI companies that are not reliant on local banks for financing; while slower exports will affect the economy, they will not significantly hurt the banks.
Furthermore, banks should be the biggest beneficiaries of the shift to more domestically driven growth because Vietnamese banks touch nearly every part of the country’s domestic economy, and banks are especially exposed to real estate and consumption, which we expect will help drive the economy in 2025.
We expect the Government will take concrete steps to boost the real estate market this year, which could result in mortgage loan growth doubling from around 10% in 2024 to 20% in 2025.
A real estate market revival would also boost consumer confidence, as well as other forms of high margin consumer lending, such as auto loans and buy-now-pay-later purchases.
Consumer confidence in Vietnam was very weak throughout 2023 and in the beginning of 2024 but began recovering from mid-2024. A real estate market revival would further boost confidence and lending to consumers.
The Government also plans to support 2025 GDP growth by spending more on infrastructure development, which should create more lending opportunities for banks. That said, the most important takeaway from all of the above is that the combination of increased infrastructure spending, improved consumer sentiment, and a real estate market revival would all propel banks’ credit growth, support banks’ NIMs, and foster the ongoing recover of asset quality in Vietnam.
Recovering asset quality & improving loan mix
We expect the earnings of Vietnam’s listed bank shares to grow 17% this year, driven by 15% system-wide credit growth and by a slight increase in system-wide NIM (by 6 bps to 355 bps in 2025). The ongoing recovery in asset quality will also support earnings growth somewhat this year, as will an improved composition of loan growth.
We discuss both of those topics below, as well as interdependencies between loan growth, NIM, and asset quality. For example, weak demand for mortgages in 2024 prompted banks to grow their business lending by nearly 20% last year, but much of that new lending was short-dated working capital loans, lent at highly competitive interest rates, which in-turn depressed NIMs.
We expect Vietnam’s system-wide loan growth to remain at around 15% in 2025 but for high-margin retail loan growth to accelerate from around 12% in 2024 to 15% in 2025. We also expect banks to make more long-dated loans this year by lending to infrastructure projects, which typically have long time horizons.
The resulting “maturity transformation” associated with those new long-dated loans will support NIMs (banks earn higher profits by gathering short term deposits and extending long-term loans that usually earn higher interest rates).
That said, some banks extending long term loans will also need to raise additional long-term deposits/funding to fund that lending, which will temper the profitability of those loans. Finally, real estate lending picked up considerably last year as the market recovery gathered steam, although some lending to real estate developers was for the refinancing of maturing corporate bonds that developers previously sold to retail and other investors.
Mixed NIM dynamics
We expect system-wide NIM to tick-up slightly in 2025. Consumer and infrastructure lending should boost NIMs, and the real estate market rebound means that banks will not need to roll-over loans to problematic borrowers at low interest rates in order to “rescue” their customers.
Also, some banks extend “window dressing” loans with de minimis NIMs to reach their credit quotas when credit demand is low – in order to ensure being granted comparable credit quotas by the SBV the following year. Such lending depresses reported NIMs, but banks should be able to meet their credit growth quotas with real loan demand this year, which in-turn should alleviate this source of downward NIM pressure in 2025.
All of that said, system-wide loan growth in Vietnam outstripped deposit growth by 4% pts as of end-September (9% year-to-date loan growth versus 5% year-to-date deposit growth), which is putting upward pressure on deposit rates.
We would characterize the current state of system-wide liquidity in Vietnam as “tight, but not stretched.” That characterization is consistent with the fact that six-month deposit rates initially fell by about 60 bps in early-2024 (reaching a low of 3.5% in March), and then bounced back to over 4% by end-2024.
Note that: 1) The VND depreciation (5% in 2024) is also currently putting upward pressure on deposit rates, and 2) inflation averaged 3.6% in 2024 and is not significantly impacting deposit rates.
In short, we expect the average six-month deposit rates of all Vietnam’s banks to increase by 50-70 bps this year to nearly 5% by end-2025 (note that state-owned banks typically pay savers interest rates that are typically around 1% pts below the average rates private sector banks pay). That modest increase in deposit rates, coupled with all of the factors discussed above, means NIMs are likely to finish this year nearly unchanged.
Recovering asset quality
Asset quality issues in Vietnam reached a crescendo in early-2023, following the collapse of Saigon Commercial Bank (SCB) in late-2022. The official, system-wide NPL figure has hovered around 2% since then, thanks in part to various forbearance measures, although the official number looks set to start declining despite the fact that most of those measures have now expired.
More importantly, some banks started reporting “Other Income” from the recovery of bad loans that had already been written off. This so-called “write-back” income is a concrete sign that banks asset problems are now essentially finished, and it boosted sector-wide earnings by about 10% pts in 2024.
Write-backs are recorded as Non-Interest Income (NOII), which in-turn accounts for about 20% of the Total Operating Income (TOI) of Vietnamese banks. We expect NOII to grow by over 10% this year, driven by write-backs and by other non-interest income such as bancassurance fees.
However, credit costs are only likely to drop slightly (from 1.2% in 2024 to 1.3% in 2025), despite recovering asset quality. This is because the average Loan Loss Reserve in Vietnam fell from well over 150% two years ago to around 100% on average now (the median LLR is around 70% and some banks’ LLRs are well below 100%).
In short, banks in Vietnam were essentially over-provisioned in the lead-up to the SCB collapse, and then depleted their LLRs during 2023-24 to manage their reported earnings. Vietnamese banks have now started rebuilding their LLRs, which is why we do not expect a bigger drop in credit costs this year, despite improving asset quality.
Picking the winners
Vietnamese bank stocks are trading at a 1.3x FY25 P/B versus 16% expected ROE, which is ~2 standard deviations below banks’ 5-year average P/B (banks that generate 16% ROE typically trade above 2x P/B).
Valuation is also cheap on a Price Earnings Ratio basis at 0.5x PEG (8x FY25 P/E vs. 17% EPS growth). Last year, valuations were even cheaper before a partial re-rating of bank stock valuations, when the increase in bank stock prices (26%) outpaced EPS growth (14%).
One reason for that cheap valuation is that Vietnam’s 30% foreign ownership limit (FOL) for banks essentially makes local retail investors the marginal buyers who set bank stock prices in Vietnam, and those investors are not as focused on valuations as foreigners.
Investors in Vietnam’s stock market are generally aware of the sector’s inexpensive valuation, but many do not realize how big the divergence is between the valuations and stock price performance of individual banks, or how much divergence there is between the operating, asset quality, and other metrics among individual banks.
These all factor into how we select the bank stocks for our diversified portfolios, as does our expectation for a shift to more domestically driven growth this year that would benefit banks focusing on the real estate sector and lending to consumers, as well as banks that lend to infrastructure projects (the latter are likely to be state-owned banks).
We bifurcate those banks into two groups: banks with good asset quality and more diversified loans/less exposure to the real estate sector, and banks with higher exposure to the real estate sector and/or that are more aggressively geared to a recovery of consumer borrowing. We then carefully consider valuation metrics to make our actual stock picks given the wide variation as can be seen in the chart below.

The former cohort includes tickers like ACB, VCB, CTG, BID, STB, and VIB, which are all banks that have the capacity to benefit from the “rising tide lifting all boats” dynamic that we expect for Vietnam’s banks this year.
Those banks are especially able to expand their lending to the real estate sector since they are not encumbered by legacy issues and/or the need to support their distressed customers. These are also the banks benefitting the most from write-back income because their prior prudent lending practices mean that they have more recoverable collateral assets backing their loans.
The latter cohort includes more aggressive banks like TCB, VPB, MBB, and HDB, which may either directly benefit by increasing lending to real estate developers or will likely see some of their legacy asset quality issues resolved by a revival of the real estate market.
For example, we mentioned above that the LLRs of some banks are well below 100%; the stock prices of thinly provisioned banks (or banks that the market believes have underreported their bad debts) should be highly geared to a recovery in the real estate market.
A strategy for 2025
The portfolios of our active investment funds include both “fast mover” banks that are highly geared to Vietnam’s likely economic scenario this year, plus some more conservative banks that are unencumbered with legacy issues.
We think of this as a “barbell” bank investment strategy and also overlay bank-specific considerations into our investment decisions, such as picking banks that have recently resolved (or are likely to soon resolve) legacy issues, banks with particularly strong digitization plans, and/or banks that can (and will) raise substantial amounts of capital in order to fund their growth going forward.
Conclusions
Bank stocks significantly outperformed the VN-Index in 2024, and we expect strong performance this year, given the low valuation of bank stocks (1.3x P/B vs 16% ROE). That said, there is a wide dispersion between the valuations, asset quality, and earnings growth drivers of listed banks, giving active fund managers ample opportunities to outperform that market.
Finally, we expect sector-wide earnings growth to pick up this year, driven by a shift in Vietnam’s GDP growth drivers from external factors in 2024 to domestic driven growth in 2025.
- Read More
Vietnam's telco giant Viettel signs deal with France’s John Cockerill Defense
Viettel High Tech, the core military and civilian R&D arm of Vietnam’s military-run telecom giant Viettel, has signed a cooperation agreement with John Cockerill Defense, a leading weapon designer and manufacturer in France.
Companies - Thu, May 29, 2025 | 9:14 pm GMT+7
MB showcases comprehensive financial solution Biz MBBank at Digital Transformation Day event
Vietnam's leading bank MB on Thursday introduced its latest digital technology solutions, notably the Biz MBBank digital financial platform, at the "Smart Digital Ecosystem in the New Era" event organized by the central bank.
Companies - Thu, May 29, 2025 | 8:02 pm GMT+7
Vietnam's auto distributor TMT to launch $3.8 mln charging station firm
Vietnamese auto distributor TMT Motors has announced the establishment of a charging station company with a charter capital of VND100 billion ($3.84 million).
Companies - Thu, May 29, 2025 | 4:45 pm GMT+7
US's Excelerate Energy affirms intention to turn Vietnam into LNG hub for ASEAN
Excelerate Energy wants to make Vietnam a center for LNG distribution to the ASEAN region, president and CEO Steven Kobos told Prime Minister Pham Minh Chinh at a meeting in Hanoi on Thursday.
Energy - Thu, May 29, 2025 | 4:33 pm GMT+7
Bourse shifts to heat up Vietnam's banking stocks
Several Vietnamese banks are planning to move their shares from the Unlisted Public Companies Market (UPCoM) to the Ho Chi Minh Stock Exchange (HoSE) this year, creating new momentum for banking stocks, long dubbed the “king” group.
Finance - Thu, May 29, 2025 | 2:48 pm GMT+7
Dairy giant TH Group proposes 5 projects in southern Vietnam
TH Group, one of Vietnam’s leading dairy producers, has proposed five major projects in the southern province of Binh Phuoc, in the fields of industrial production and urban area, golf course and high-tech agricultural production zone developments.
Industries - Thu, May 29, 2025 | 12:02 pm GMT+7
2024 cyberattack 'a blessing in disguise' for Vietnam's leading broker VNDirect: chairwoman
The cybersecurity breach that major Vietnamese brokerage VNDirect Securities encountered in 2024 was "an unfortunate incident, but also a lucky chance", chairwoman Pham Minh Huong said on Wednesday.
Finance - Thu, May 29, 2025 | 9:48 am GMT+7
Vietnam prioritizes smart, green seaport projects: Deputy PM
Vietnam encourages smart and green seaport investments, as technical barriers related to CO2 emissions and CO2 taxes begin to be tightened up globally.
Infrastructure - Wed, May 28, 2025 | 10:07 pm GMT+7
New Zealand, Vietnam expand timber trade partnership
New Zealand Forestry and Trade Minister Todd McClay on Tuesday unveiled a new bilateral agreement with Vietnam designed to boost timber exports and remove potential trade barriers in the two countries' forestry sectors.
Companies - Wed, May 28, 2025 | 8:53 pm GMT+7
Norway vows to support Vietnam's energy transition
Norway is committed to supporting Vietnam’s energy transition, Norwegian Ambassador to Vietnam Hilde Solbakken said at a technical seminar held in Hanoi on Wednesday.
Companies - Wed, May 28, 2025 | 8:49 pm GMT+7
Thailand expected to become regional luxury retail hub
Thailand's luxury retail market is valued at $4.4 billion and projected to grow by approximately 5% annually through 2028, placing the country at the forefront of luxury retail in Southeast Asia and seventh in Asia-Pacific, according to property consultant CBRE Thailand.
Southeast Asia - Wed, May 28, 2025 | 8:44 pm GMT+7
Indonesia affirms role as leading global maritime hub
The Indonesia Maritime Expo, held as part of Indonesia Maritime Week 2025 on May 26-28, is the first large-scale maritime event in the country, aiming to affirm its role as a global maritime hub and promote the sustainable development of the region’s maritime industry.
Southeast Asia - Wed, May 28, 2025 | 8:41 pm GMT+7
Vietnam benchmark VN-Index hits 3-year high
The VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), recorded a four-day gaining streak on Wednesday, rising 2.06 points, or 0.15%, to 1,341.87 points - the highest since May 2022.
Finance - Wed, May 28, 2025 | 6:37 pm GMT+7
HSBC launches sustainability improvement loan in Vietnam
HSBC has introduced its Sustainability Improvement Loan, a new financing solution tailored for businesses with annual turnover less than $550 million, in Vietnam, after launching it in 12 markets including the UK, Middle East, Hong Kong and Singapore last year.
Banking - Wed, May 28, 2025 | 6:15 pm GMT+7
CMA CGM, Saigon Newport to jointly develop deep-sea terminal in northern Vietnam
France's CMA CGM Group, a global player in sea, land, air, and logistics solutions, has signed a partnership agreement with Vietnam's Saigon Newport Corporation (SNP) to develop a deep-water terminal in Hai Phong city, northern Vietnam.
Infrastructure - Wed, May 28, 2025 | 5:01 pm GMT+7
Japan’s chipmaker Rapidus pledges semiconductor workforce training for Vietnam
Rapidus Corporation, a semiconductor manufacturer of Japan, has affirmed its readiness to train semiconductor workforce for Vietnam.
Economy - Wed, May 28, 2025 | 3:21 pm GMT+7
- Consulting
-
Rethinking resilience: How typhoon Yagi redefines supply chain strategies in northern Vietnam
-
Remove roadblocks to lure foreign investment into Vietnam: HSBC exec
-
AI can be a game changer for Vietnam tourism
-
In trade and investment, ASEAN and China are better together
-
Investment opportunities in LNG-to-power projects in Vietnam
-
Pepper prices 2024: will the dream of 'black gold' repeat?