Vietnam Banks Near Par as Capital Raises Pressure Shares

The economic significance is that cheap bank stocks are not necessarily a sign of broad sector distress, but of rising selectivity. Banks sit at the center of credit creation, so their share prices are effectively a referendum on asset quality, funding costs and the durability of loan growth. When earnings are expected to grow more slowly than capital needs, valuations can look optically attractive while still failing to compensate for dilution, weaker margins or higher provisioning.

That risk is becoming more visible as many lenders move to strengthen capital. NVB plans a private placement of more than 3.3 billion shares, equivalent to 33,000 billion dong, while PVcomBank is preparing a share issue equal to about 33% of existing capital, or 4,088 billion dong. Larger banks are also turning to foreign funding, with SHB securing a syndicated loan of $600 million and NAB one of $350 million. Those moves can support capital adequacy and keep credit growth alive, but they also raise the supply of shares and can dilute existing holders if new capital does not translate into proportionate profit growth.

That is why investors are looking beyond headline price-to-earnings ratios. SSI Research says planned capital raises may offer short-term trading support, but they also increase the share count and can dilute returns if banks do not convert the money into stronger earnings. In a market where credit remains the main engine of growth, the quality of that growth matters more than its speed. The key question is not whether banks can raise funds, but whether they can deploy them efficiently enough to lift return on equity, sustain dividends and justify higher multiples.

Macro conditions add another layer of pressure. Higher interest rates continue to strain borrowers, especially small and medium-sized enterprises, household businesses and homebuyers. SSI expects non-performing loans among banks under its coverage to rise to 1.72% in 2027, up 10 basis points from the comparable period, with private lenders more exposed because of larger property and SME loan books. Net interest margin for the sector is forecast to ease to 3.11%, with state-owned banks slightly better insulated and joint-stock lenders seen as more vulnerable to funding-cost pressure.

There is also a structural drag from the shift in credit toward infrastructure lending. Those loans tend to be longer dated and lower yielding, forcing banks to match them with more expensive funding at a time when rates may not fall sharply. That combination can compress spreads even if loan volumes continue to expand.

For investors, the message is straightforward: bank stocks near par value may be cheap, but cheap is only attractive if the business can absorb capital raises, manage rising credit risk and protect margins. The current weakness creates opportunities for selective stock pickers, yet it also widens the gap between lenders with durable funding franchises and those relying on equity issuance to keep growth going.