Vietnamese bank shares came under broad pressure on Monday after regulators stepped up demands for lenders to cut lending rates, raising the prospect of narrower margins and slower profit growth across the sector.
Vietnam Banks Fall on Lending Rate Cut Pressure
The policy push matters because banks are already coping with higher funding costs, and any faster reduction in loan yields than deposit costs would squeeze net interest margins, the main driver of earnings for commercial lenders. That comes at a time when the State Bank of Vietnam is also trying to balance credit support for the economy against inflation, exchange-rate pressures and asset-quality risks.
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The VN-Index fell more than 16 points to 1,689.84, losing the 1,700 level, with banks among the heaviest drags. VPBank, ACB, Sacombank, Vietcombank, SHB, BIDV, NVB and HDBank all declined. VPB fell 2.04% to VND24,000 a share on volume of more than 30.7 million shares, even after the lender reported third-quarter profit of more than VND11 trillion, its second straight quarter of record earnings. SHB traded more than 30 million shares as it slipped 0.94%, while NVB and VBB both lost more than 2%.
The selloff reflected a market that is increasingly questioning how much profit banks can sustain if they are asked to absorb part of the economy’s financing burden. At a policy meeting last Friday, Deputy Prime Minister Nguyen Van Thang said lending rates remained high and were hampering production, business activity and credit access for households and firms. He asked the central bank to take steps to cut lending rates by 1.5-2 percentage points for priority sectors.
Governor Pham Duc An later urged commercial banks to review and rebalance profit plans, saying lenders needed to allocate more resources to support existing customers and new borrowers. His comments underscored the political and economic sensitivity around bank pricing in a slowing credit environment.
SSI Securities said the banking sector’s margins are likely to keep narrowing as deposit costs remain elevated. It cited deposit rates of about 8.3% at state-owned commercial banks, 8.8%-9.4% at major joint-stock lenders and 9.8%-10% at smaller banks as of September. The broker said those rates reflected a widening gap between credit growth and deposit mobilization that has built up since 2024, when lending expanded faster than deposits.
That creates a difficult backdrop for profitability. If lending rates fall faster than funding costs, net interest margins will come under pressure just as banks may need to increase provisions for bad loans. SSI said margins fell in the first quarter of 2026 before recovering to 3.22% in the second quarter, but it sees that rebound as temporary. It expects sector-wide NIM to edge down to 3.11% in 2027 and pre-tax profit growth to slow to 15.4% from a 19.5% forecast for 2026.
The split in the sector is likely to widen. State-owned lenders have an edge because of their large corporate and foreign-investment deposit bases, which tend to provide cheaper and stickier current-account and savings deposits. Joint-stock banks with aggressive loan growth targets, including MBBank, VPBank and HDBank, face more pressure to keep deposit rates elevated to secure funding.
For investors, the story is less about one day’s share price weakness than about a policy-driven re-rating of bank earnings. The bull case is that lower lending rates could support loan growth, improve credit demand and reduce stress on borrowers, ultimately limiting future bad debts. The bear case is that margin compression arrives first, while the benefits to asset quality and loan volumes take longer to show up.
That tension is now at the center of Vietnam’s banking trade. The sector may still deliver solid headline profit growth in 2026, but the market is increasingly looking past that to 2027, when cheaper loans, tighter margins and higher provisioning costs could leave weaker lenders underperforming.
| Entity | Gains | Losses |
|---|---|---|
| Households and businesses | ▲Lower borrowing costs | ▼Less bank pricing power |
| State-owned banks | ▲Stable low-cost deposits | ▼Smaller margin expansion |
| Joint-stock banks | ▲Potentially higher loan volumes | ▼Higher funding costs |
| Bank investors | ▲Support from credit growth | ▼Pressure on earnings multiples |
