Credit-fueled expansion meets hard questions on risk and resilience
Vietnam’s banking sector is picking up speed — fast enough to turn heads across ASEAN. The State Bank of Vietnam (SBV) has set an ambitious 16% credit growth target this year, a figure that outpaces most regional peers and speaks volumes about the country’s economic confidence. But underneath the bullish headlines, there’s a delicate balancing act in play.
A potent mix of optimism, mounting credit appetite, and asset quality anxiety is shaping Vietnam’s financial landscape in 2025. For a country once tethered to slow, conservative banking norms, it’s a notable shift — and one that could mark the beginning of a new era for Southeast Asia’s rising dragon.
Growth surges as Vietnam bets big on capital demand
Manufacturing’s roaring comeback, real estate’s cautious recovery, and a booming trade sector have combined to push Vietnam’s appetite for credit into overdrive.
Banks are responding with enthusiasm, expanding loan books across retail, SME, and corporate segments. The central bank’s 16% credit growth ceiling reflects that demand and is among the highest in the region — well above Indonesia’s 12.4% and Malaysia’s 5.5% guidance this year.
Net interest margins (NIMs), the bread-and-butter of banking profitability, are widening too. Analysts at Vietcombank Securities estimate NIMs across top-tier lenders will hit 3.6% by year-end, a sharp rebound from the pandemic-era lows.
In short, the top line is swelling.
One sentence here to keep it breezy.
Asset quality clouds the picture for smaller lenders
But the flip side of this rapid expansion? Credit risk is creeping back onto the radar — especially around real estate, the sector that sparked past bank stress in Vietnam.
While larger banks like BIDV and VietinBank have beefed up provisions and cleaned up balance sheets, second- and third-tier institutions are still wrestling with legacy debt. Smaller lenders are also facing liquidity crunches, struggling to maintain the capital buffers required to keep lending aggressively.
Some experts warn that as credit accelerates, the cracks in risk management may widen. And that’s before factoring in the hidden land exposure that often lurks within commercial loans.
• Nearly 40% of total bank credit exposure is estimated to touch real estate either directly or indirectly, according to Dragon Capital.
SBV has nudged banks to tighten lending standards, but the sheer pace of expansion may leave room for slippage.
Vietnam vs ASEAN: The gap is closing fast
Vietnam still trails the region’s banking giants in total assets. Singapore’s banks, led by DBS and OCBC, dwarf Vietnamese lenders in size and international reach. Indonesia and Malaysia maintain more mature capital markets and deeper fintech ecosystems.
But the momentum, for now, clearly belongs to Vietnam.
Take a look at this comparative snapshot:
| Country | Total Bank Assets (2024 est.) | Credit Growth Target (2025) | ROA Forecast (%) |
|---|---|---|---|
| Vietnam | $670 billion | 16% | 1.60 |
| Indonesia | $1.7 trillion | 12.4% | 1.25 |
| Malaysia | $980 billion | 5.5% | 1.30 |
| Singapore | $2.3 trillion | 4% | 1.45 |
Vietnam may be the smallest player here — for now. But its pace is turning heads, and investors are starting to pay attention.
Foreign interest and fintech reform could reshape the rules
One of the biggest structural shifts in recent months has been SBV’s decision to allow a regulatory sandbox for fintech innovation. It’s a big deal. Vietnam’s banks have been traditionally cautious on tech — most digital services have been bolted onto legacy infrastructure rather than truly reimagined.
Now that’s starting to change.
In parallel, the government is strategically raising foreign ownership caps in select banks. The cap, once firmly locked at 30%, has been eased for several institutions, making room for Japanese, South Korean, and Singaporean banks to increase stakes.
That influx of capital — and more importantly, governance expertise — could be a game changer for mid-tier banks struggling with compliance and core banking tech upgrades.
Just one line here to slow things down.
Ahead: From fast credit to smarter lending
Looking ahead, analysts say Vietnam’s banks are approaching an inflection point. The last five years were about growth — raw, rapid, and fueled by credit.
The next five?
They’re likely to be about quality.
Samir Dixit, global head of Acorn Management Consulting, says Vietnamese banks will need to transition from volume-led models to ones anchored in better loan book quality, more efficient cost structures, and stronger risk controls. “You can’t run forever on a high-octane credit model. There has to be a pivot,” he said.
And the industry seems to agree.
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State-owned giants are investing heavily in Basel III implementation.
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Private banks like Techcombank and VPBank are pushing for Tier-1 capital raises to boost stability.
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Digital risk monitoring is being adopted — slowly, but it’s happening.
One senior executive at a Hanoi-based bank described the mood as “cautious optimism with a dash of realism.”
A sector ready to grow up — but not without friction
Of course, consolidation is coming. Vietnam’s banking ecosystem is still fragmented, with over 30 active commercial banks, many of which lack scale or capital adequacy.
Expect M&A activity to pick up.
Analysts predict that 5–7 small and mid-sized banks could be acquired or merged by 2027 if the central bank follows through with structural reforms.
Not everyone will make it.
But if Vietnam can thread the needle — managing risk, inviting the right foreign capital, and improving internal governance — the sector could become one of ASEAN’s most dynamic stories over the next decade.
