Vietnam Bank Sector Outlook_2025

We expect credit growth to reach 15% YoY in 2025E. We expect the property market upcycle to emerge in 2H25, which should boost overall domestic sentiment and credit demand. Retail-focused banks such as ACB and VIB should reap the benefits of improved consumer sentiment.

We think funding costs will increase by 10-50bps, with liquidity under pressure from the strong USD. Driven by the interest rate gap, the VND has devalued by -4.3% YTD in 2024E, prompting the SBV to intervene by withdrawing financial system liquidity. In a scenario of continued USD strength, the SBV may need to further tighten liquidity, which would drive up interbank rates and banks’ overall funding costs as a result.

But we expect buoyant NIM anyway. We expect NIM to be flat or increase modestly by 5-10bps YoY in 2025E as the net result of the 1) rising cost of funds as discussed above, offset by 2) an uptick in loan yields.

We expect average loan yields in 2025E to increase along with the real estate market recovery in 2H25. Loans to this segment are typically long-term and carry higher yields, which should offset both the increased funding costs and banks’ compliance with the SBV’s forbearance policy

Asset quality to improve too. 80-90% of system collateral comprises property, so the property market upcycle should improve banks’ ability to liquidate collateral and resolve bad debt, thus improving overall asset quality. In our view, concerns about real estate represent the key reason for the undervaluation of bank stocks, so the expected real estate upcycle should also lead to a re-rating of bank stocks in 2025E.

Overweight the banks. Valuations remain attractive, with the sector trading at 1.1x 2025E PB and delivering ROE of 18% (Bloomberg consensus). The anticipated real estate recovery in 2H25 makes for an attractive opportunity to Overweight the banks within Vietnam stock portfolios now. We recommend BUY on ACB, TCB, VCB, HDB, MBB, and VPB.

For the complete report, please access here: Bank_Sector_Outlook_2025

Analyst: Tanh Tran, tanh.tran@yuanta.com.vn