Sector Insight

1. Structural gaps within the system remain a key bottleneck

Credit grew 8.7% YTD (+5.3% QoQ) and deposit mobilisation caught up (+5.3% QoQ), yet the sector LDR stayed elevated at 102.4% and effective deposit rates remain anchored at 8–9%. Banks have bridged the gap with valuable papers and offshore funding (VPB USD1.44bn, HDB USD720mn, ACB USD500mn).

2. 2Q26 earnings beat expectations, while asset quality warrants closer monitoring

PBT reached VND95.7tn (+27.6% YoY); 1H26 rose 21% YoY, completing 49.4% of our full-year forecast, driven by NIM recovering to 3.22%, non-interest income +33.2% QoQ and CIR easing to 28.2%. On the other hand, the NPL ratio rose to 1.97%, Group 2 loans to 1.45%, and NPL coverage slipped to 81.4%.

3. Forecasts and valuation under two scenarios

Base case: 2026–2027 PBT growth of 16–17%; conservative case: 2027 growth of only around 10% if funding costs are fully repriced and commercial banks implement broad-based lending rate cuts. The sector P/B is currently at 1.4x, 14% below its 5-year average, largely pricing in the risks. We prefer VCB, CTG, BID (defensive) and VPB, MBB, TCB, HDB (growth).