Vietnam’s market status upgrade to boost bank stocks as foreign inflows rise

Vietnam’s reclassification to "secondary emerging" market status is expected to attract billions of U.S. dollars from global passive and active funds, raising expectations that banking stocks, which dominate market capitalization and liquidity, will be among the first beneficiaries.

Market upgrades in Qatar, the UAE, Pakistan and, more recently, Kuwait have historically triggered strong foreign inflows into large, liquid stocks that meet criteria on free float, liquidity, and market cap. Analysts expect a similar pattern in Vietnam once the market is upgraded in September next year as planned.

Bank stocks among early gainers

FTSE Russell recently flagged 28 Vietnamese stocks that could enter its Global All Cap index, including four banks: Vietcombank (VCB), Sacombank (STB), SHB, and Eximbank (EIB).

According to broker BSC, SHB and EIB have more than 20% room for foreign ownership, with SHB offering the largest remaining quota at 26%, bolstering their chances of benefiting from fund inflows.

SHB has long ranked among the most liquid banking stocks, supported by a large free float - a key requirement for index inclusion. High trading turnover has helped the stock meet technical benchmarks followed by emerging-market ETFs.

SHB shares have risen about 80% so far this year, with regular sessions of foreign net buying. The bank paid an 18% dividend last year through cash and shares. Dividend policy has been maintained steadily at 10-18% for many years.

SHB gained 2% on December 3 to VND17,350 ($0.66) a share, with more than 81 million shares traded and foreign investors buying a net 6.5 million shares.

For the first nine months of 2025, SHB reported pre-tax profit of VND12.23 trillion ($464.2 million), up 36% year-on-year and equal to 85% of its full-year target. Its capital adequacy ratio stood above 12%, well above the 8% minimum under local Basel II rules.

Total assets reached VND852.7 trillion ($32.35 billion) at end-September, up 14.1% from the end of 2024 and exceeded the 2025 plan, creating a foundation for reaching the milestone of VND1,000 trillion ($37.94 million) in total assets by 2026.

Capital adequacy ratios are better than the regulations of the State Bank of Vietnam and international standards, in which CAR is over 12%, significantly higher than the minimum level of 8% according to the central bank's Circular 41/2016/TT-NHNN.

Outstanding customer loans reached VND607.85 trillion, up 17% compared to the beginning of the year, showing stable capital absorption capacity and clear competitiveness in approaching the target segment.

The bank continues to closely follow the national growth target with a positive increase in loan proportion in key areas. SHB also continuously expands its service ecosystem, promotes digital transformation, improves risk management according to international standards, and optimizes asset quality.

Policy changes may unlock new growth cycle

Upcoming policy reforms - particularly the National Assembly’s consideration of removing credit growth caps - and accelerated public investment are expected to create a more favorable environment for banks.

Removing credit quotas could allow more flexible loan growth but also requires stronger capital and risk management to maintain system stability.

Banks are also expected to benefit from higher credit demand tied to large infrastructure programs and the recovery of construction, logistics and materials sectors.

Analysts say the combination of macro policy changes, infrastructure expansion and an eventual market upgrade could support a stronger, more sustainable growth cycle for the banking sector. Large banks with high capital buffers and strong liquidity are seen as prime beneficiaries.

Rising interest from foreign funds in recent months suggests growing confidence ahead of a potential reclassification. SHB, analysts say, could see further upside in valuation and market positioning if Vietnam secures an upgrade.