Shrinking margins pressure Vietnamese bank stocks, but differentiation offers opportunities

Vietnamese bank stocks currently trade at a five-year low valuation, grappling with shrinking net interest margins (NIM) due to rising capital costs and system liquidity pressures. Despite these challenges, several factors offer support for the banking sector in the coming period.

Analysts highlight that state-owned banks like BIDV, Vietcombank, and VietinBank are poised to benefit from increased public investment and loan disbursement for key projects. While their NIM may narrow slightly, their credit growth prospects remain strong. These banks also possess potential for future capital increases through foreign ownership limits.

“

NIM of state-owned banks may narrow but only by about 0.1-0.2%, while credit growth prospects remain quite good.

Large commercial banks such as VPBank, Techcombank, and ACB are also viewed favorably due to strong governance and their ability to boost credit growth to offset NIM declines. However, a significant differentiation is expected among banks, driven by asset quality and unique competitive strengths, rather than a simple state-owned versus private dichotomy.

Factors influencing this differentiation include credit growth quotas allocated by the State Bank of Vietnam and banks' advantage in accessing cheap capital, indicated by high CASA (current account savings account) balances. Banks actively supporting the restructuring of weaker lenders may also receive preferential treatment in credit limits, enabling stronger loan disbursement.

“

There will be differentiation among banks but it will not be divided along the lines of 'state-owned' or 'private'. Instead, growth potential will be closely dependent on asset quality and the specific competitive advantages of each bank.