Vietnam Banks’ Healthier NPL Ratio Hides a Larger Debt Stock

Vietnam’s listed banks cut their non-performing loan ratio even as the stock of bad debt kept growing through the first half of 2026. The State Bank of Vietnam put the system on-balance-sheet ratio at 3.31 percent in June, down from 3.44 percent at the end of 2025 and 4.3 percent in January 2025. Strip out five special-controlled banks and the same books show 1.51 percent.

That cleaner ratio is the easy headline. The harder one is the pile behind it: Techcom Securities’ review of 27 listed lenders found a second-quarter NPL ratio of 2.01 percent and a bad-debt stock of VND 310 trillion, more than double the VND 132 trillion those banks carried in the third quarter of 2022, because loans grew faster than the bad ones were cleared.

THE SPLIT IN THE BOOKS

• System ratio: On-balance-sheet NPLs at all credit institutions were 3.31 percent in June 2026, or 1.51 percent excluding five special-controlled banks.
• Listed stock: Twenty-seven listed banks held VND 310 trillion of NPLs in the second quarter, with the ratio at 2.01 percent against 1.86 percent at the end of 2025.
• One-bank skew: Sacombank’s ratio reached 7.54 percent, and that lender accounted for 77.7 percent of the listed increase.
• Next bucket: Group 2 loans, 10 to 90 days past due, rose to 1.38 percent of loans from 1.17 percent at the end of 2025.

A broader State Bank tally that folds in loans sold to the Vietnam Asset Management Company and loans at risk of turning bad stood at 3.77 percent in June, down from 3.97 percent at the end of 2025. The system still worked through VND 141.4 trillion of NPLs in the first half, 17.5 percent less than a year earlier, and VND 88.02 trillion of that, 62.2 percent, was done by taking provisions rather than by getting the cash back.

The Ratio Fell Because Loans Grew Faster

Credit is the denominator that makes a stable ratio look like a cleanup. The State Bank said 2025 credit grew 19.1 percent, above the 16 percent target, and that the credit-to-GDP ratio reached 146 percent. By August 28, 2026, outstanding credit was VND 20.2 quadrillion ($776.5 billion), up 10.2 percent from the end of 2025, against a 15 percent target for the full year.

Techcom Securities made the masking explicit. From the third quarter of 2022 to the second quarter of 2026 the listed NPL balance rose from VND 132 trillion to VND 310 trillion, yet the ratio only moved from 1.60 percent to 2.01 percent. Year on year the ratio fell 0.03 percentage points while the balance rose VND 43 trillion. The figure to watch, the note said, is the balance, not the ratio.

Net new NPLs in the first half of 2026 were VND 104,323 billion, 1.8 times the VND 57,565 billion written off against provisions. Coverage slipped to 78.8 percent from 82.9 percent at the end of 2025, because provisions rose 14.7 percent while NPLs rose 16.1 percent. Twenty of the 27 banks still cut their ratios year on year. The sector average did not, because one name moved the other way.

June Votes Put Seizure Rights Into Permanent Law

The 2025 dip in some books arrived before the new seizure rules even applied. Resolution 42/2017/QH14 had let lenders take collateral as a pilot from August 15, 2017, then through an extension to December 31, 2023. When it lapsed, banks went back to court files and uncooperative borrowers. Baker McKenzie lawyers in Vietnam Law Magazine wrote that the on-balance-sheet ratio had climbed to 4.75 percent by July 2024, from 4.55 percent at the end of 2023 and 2.03 percent at the end of 2022, before easing to 4.3 percent in January 2025.

FROM PILOT TO STATUTE

1. August 15, 2017: Resolution 42 takes effect, letting credit institutions, foreign branches, and debt traders seize secured assets without waiting on a judgment.
2. December 31, 2023: The pilot, already extended once, expires and leaves a gap in the seizure rules.
3. June 27, 2025: The National Assembly writes the core of Resolution 42 into amendments to the Law on Credit Institutions (Law No. 96/2025/QH15).
4. October 15, 2025: The amended law takes effect and applies seizure rights to all collateralized NPLs, not only loans made before August 15, 2017.

State Bank figures compiled by ACBS show the pilot processed VND 443 trillion of bad debt from 2017 to 2023. Baker McKenzie put monthly settlement at about VND 5.8 trillion by the end of 2023, from about VND 3.52 trillion a month in 2012 to 2017. Voluntary repayment rose from 22.8 percent of NPLs to 36.4 percent, and collateral sales brought in VND 92.5 trillion. After the lapse, ACBS put the stock at about VND 734 trillion by the end of 2024.

The new statute does more than restart the pilot. Lenders may seize collateral without a court ruling when the security contract says so, and commune-level People’s Committees and local police are supposed to keep order at the door. Indochine Counsel’s note on how the amended credit institutions law took effect also flags a wider trigger: seizure can proceed where the creditor has taken possession or control of the collateral, not only where the security interest is registered. FiinRatings said the full payoff would show from the second half of 2026. VnDirect had earlier sketched a path from 4.3 percent in January 2025 to below 3 percent in 2026. The system is still above that line.

The Failed Four Now Belong to Faster Lenders

The other transfer sits on the balance sheet of the banks that were told to take the failed lenders. OceanBank went to MB and became MBV. CBBank went to Vietcombank and became VCBNeo. DongA Bank went to HDBank and became Vikki Bank. GPBank went to VPBank and was later rebranded Ky Nguyen Thinh Vuong Bank. Three of those names had been bought by the State Bank for zero dong years earlier. They remain separate legal entities and are not consolidated into the parents’ books.

WHERE THE FOUR LANDED

• OceanBank to MB: Renamed MBV; MB has said it will inject VND 5 trillion over seven to eight years. By September 2025, MBV’s assets were VND 91.5 trillion ($3.52 billion), with credit up 94 percent and deposits up 30 percent.
• CBBank to Vietcombank: Renamed VCBNeo; the parent already runs the lowest NPL ratio among large lenders.
• DongA Bank to HDBank: Renamed Vikki Bank, with HDBank planning VND 9 trillion after accumulated losses are cleared.
• GPBank to VPBank: VPBank has talked of contributing as much as VND 16 trillion and of 35 percent credit growth over five years from the deal.

The State Bank then handed those parents extra credit quotas. As of August 28, VPBank’s credit was up 23.2 percent from the end of 2025, HDBank 21.8 percent, and MB 13.2 percent, against 10.2 percent for the whole system. Techcombank and MSB were also near their caps after six months. Fast books are the prize for taking the wreckage. They are also how a bad-debt ratio gets diluted.

Sacombank Alone Accounts for 77.7% of the Rise

Take Sacombank out and the listed story flips. Techcom Securities found the other 26 banks cut their NPL ratio from 2.02 percent to 1.78 percent year on year, and their NPL balance rose only 3.8 percent. Sacombank accounted for 77.7 percent of the listed increase. Its ratio rose 5.08 percentage points to 7.54 percent, the highest in that sample, and most of the move sat in Group 5, loss-status loans, which went from 1.77 percent of its book to 5.07 percent.

Sacombank’s own first-half 2026 statements show why the average misleads. Customer loans rose 1.54 percent, to VND 636,028.9 billion from VND 626,392.3 billion. On-balance-sheet NPLs rose 19.48 percent, to VND 47,957.1 billion from VND 40,136.8 billion. Group 2 balances jumped to VND 16,826.7 billion from VND 4,658 billion. Group 5 alone was VND 32,273.9 billion, about 67.3 percent of its NPLs. Pre-tax profit in 2025 was VND 7,628 billion, 52 percent of plan, after more than VND 11 trillion of provisions. The 2026 plan aims for NPLs below 4.5 to 5 percent and assets above VND 1 trillion on the Vietnamese counting scale of a million billion. Techcom Securities read the Group 5 spike as legacy recognition tied to an old shareholder group, not a fresh default wave, and said the sector ratio will look like 1.78 percent only after that stock is worked through.

The rest of the map is not uniform. Vietcombank’s NPL ratio was 0.61 percent in the second quarter, with loan-loss reserves at 279 percent of NPLs. Asia Commercial Bank and Techcombank were around 1 to 1.1 percent, with coverage above 100 percent. HDBank, which took DongA, showed an NPL ratio of 2.79 percent and Stage 2 loans around 4.7 percent. VPBank, which took GPBank, showed 3.28 percent NPLs and 3.17 percent Stage 2, with coverage of 56 percent. Techcom Securities flagged HDBank and LPBank among the names whose asset quality worsened year on year, and PGBank, Nam A Bank, ACB, and Vietcombank among those that improved.

Why Group 2 Loans Started Climbing Again

The next file is already on the books as “needs attention.” Group 2 loans at the 27 listed banks were 1.38 percent of the book in the second quarter, after a low of 1.17 percent at the end of 2025, and the stock was about VND 213 trillion. Combined Groups 2 to 5 rose to 3.39 percent from 3.04 percent. That bucket had been falling for about ten quarters. Two quarters of increases ended that run.

Fifteen of 27 banks had a higher Group 2 ratio than a year earlier, including some of the cleanest names. Techcom Securities said the largest jumps were at Saigonbank, Sacombank, PGBank, and Vietbank, and that at past migration rates the extra Group 2 stock becomes NPLs within one to two quarters. Accrued interest and fees were up 36.1 percent year on year, twice the pace of loan growth, another sign that cash is arriving slower than the contracts assume.

Borrowers already feel Group 2 before it becomes an official NPL. A missed credit-card fee can sit on the Credit Information Center file for months after the cash-flow problem is gone, and that tag is enough for a mortgage desk to say no. The listed-bank climb in Group 2 is the same delay, written at system scale: the official bad-debt ratio can still look calm while the 10-to-90-day bucket is refilling.

Borrowers Still Need Independent Collateral Valuations

Do Thien Anh Tuan, who teaches at Fulbright University Vietnam, had pressed lawmakers to write Resolution 42 into statute in a way that protected both sides. Lenders needed a clean right to take collateral. Borrowers needed notice, a market price, and a way to recover any surplus after the debt, interest, and reasonable costs.

To ensure fairness, there needs to be third-party oversight or an independent valuation mechanism throughout the entire process.

Do Thien Anh Tuan, lecturer, Fulbright University Vietnam

“Lenders must ensure that borrowers are notified within a reasonable timeframe during the debt settlement process,” Tuan said. He warned that a bank selling collateral below market, on its own say-so, leaves the borrower with an unfair loss. The amended law adds notice rules and, on paper, help from local police. Baker McKenzie still called the local-authority duty thin without implementing decrees, and said staff will hesitate when the asset is someone’s only home and the seizure would land on the evening news.

The first-half 2025 bank-by-bank split had already shown how little a sector average meant. ACB’s Groups 3 to 5 loans were $318.6 million, down 7.9 percent, with a 1.26 percent bad-debt ratio and Group 5 down 12.6 percent to $235.8 million. VietABank’s bad debts were $38.9 million, down 11 percent, and Group 3 fell 67 percent. Nam A Bank cut Group 2 from 1.47 percent to 0.62 percent while growing assets more than 30 percent. Vietcombank held NPLs below 1 percent on more than $84 billion of assets. PGBank’s NPL stock jumped more than 42 percent to $60 million, and its ratio went from 2.57 percent to 3.3 percent. LPBank grew loans 11.2 percent, against a 9.9 percent industry average, while bad debt rose 23.3 percent to $259 million and the ratio went from 1.58 percent to 1.76 percent. Twenty-seven listed banks already held more than $10.6 billion of bad debt then, up 18.5 percent year on year.

H1 2025 NPL SNAPSHOT

A year later PGBank sits on Techcom Securities’ improving list and LPBank on the deteriorating one. The split did not close. It changed names.

Receivers Used Extra Credit Quotas Through August

The parents that took the failed banks are also the names stretching funding. Customer deposits at listed banks have lagged loans, so the gap is being filled with other credit institutions and valuable papers. VPBank’s deposit share of core funding was about 59 percent, against 75 to 80 percent at Vietcombank, BIDV, and VietinBank. Trailing 12-month net interest margin at the listed group slipped to 2.95 percent. Circular 25/2026/TT-NHNN raised the cap on short-term funds used for medium- and long-term loans from 30 percent to 40 percent, which adds room for housing and infrastructure just as Group 2 is turning up.

CREDIT GROWTH TO AUGUST 28, 2026

Easy credit is how the 2025 ratio got shaved, and it is how Group 2 gets refilled. The seizure law gives the strong banks a faster path through collateral, including the books they inherited. Sacombank still holds most of the listed increase. Until that stock, and the 10-to-90-day loans behind it, is actually recovered, a falling NPL ratio is mostly a larger denominator and a more concentrated numerator.

Disclaimer: This article is news reporting and analysis of published bank results, State Bank figures, and legal changes. It is informational only and is not investment, credit, or legal advice, and it is not a recommendation to buy, sell, or hold any bank share or to take or refinance any loan. Readers should consult a licensed financial adviser, lawyer, or qualified credit officer in Vietnam before acting on bank results, NPL ratios, or collateral rules. Figures and legal statuses reflect the cited statements and filings as of the dates in the piece and will change with later results, circulars, and court or enforcement practice.