Vietnamese banks to rely on bonds as loan growth accelerates

Deposit growth is expected to lag loan growth, and banks face higher refinancing risks.

Accelerating loan growth in 2026 will strain Vietnamese banks’ funding profiles, which may increase bond issuance, according to Moody’s Ratings.

Vietnamese banks’ loan growth has been strong since 2022, and the pace is expected to quicken going into 2026 as banks look to comply with government directives to support economic growth targets, the ratings agency said in a November 2025 sector report.

This will tighten banks' funding positions because deposit growth will lag loan growth, it added.

“Banks will increase reliance on confidence-sensitive market funding and issue more bonds. Furthermore, their modest stock of high-quality liquid assets (HQLA) provides limited liquidity buffers,” Moody’s Ratings said in the report.

Greater reliance on such funding will pose higher refinancing risks for banks, Moody’s warned.

Smaller private banks will especially be more vulnerable to funding risks.

“Vietnam's banking system is competitive and fragmented. Unlike banks with a larger franchise, smaller banks have to compete for deposits and are unable to pass on increased funding costs to borrowers,” Moody’s wrote.

An earlier stress test by S&P Global Ratings noted that smaller banks will bear the brunt of the negative impact if nonperforming loans rise moderately to necessitate increased provisioning. 

Central bank oversight should mitigate spikes in funding costs, with the State Bank of Vietnam (SBV) directing banks to keep interest rates low, it added.

Overall, strong profitability and stable capitalization will support banks' stable credit profiles, Moody’s said. “Profitability will remain strong as the impact on net interest margin (NIM) will be limited since regulators will likely maintain interest rates.”

Ongoing institutional reforms in Vietnam are also expected to support banks’ asset qualities. For example, a new law on collateral enforcement, which came into effect earlier in 2025, will reportedly strengthen banks’ ability to resolve non-performing loans (NPLs).

The direct impact of tariffs on Vietnam’s banking sector should be manageable, the S&P report added.