Sector Insight

1. Business results of listed banks
Loan growth reached 3.54% in Q1/2026. Meanwhile, Tier 1 deposit growth remained largely flat at only 0.48%, prompting banks to accelerate the issuance of valuable papers to offset slower funding growth from the retail deposit market. The inclusion of 20% of term Treasury deposits in the funding base provides short-term support for state-owned commercial banks in 2026.
NIM continued to face pressure in Q1/2026.
NPL ratios showed a slight increase by the end of Q1/2026. However, this trend is typically seasonal and requires further monitoring in the coming quarters.
Banks are targeting approximately 17% pre-tax profit growth for 2026. As of end-Q1/2026, the sector had completed around 23% of its full-year targets.

2. Outlook for 2026-27

We forecast pre-tax profit growth of 17% and 16% for 2026 and 2027, respectively. A higher interest rate environment could place pressure on asset quality in 2027.

3. Investment opportunities
HDB, MBB, VPB