How can Vietnam lenders manage liquidity stress?

The loan-deposit growth gap pushes banks toward risky wholesale funding.

Vietnamese banks face tighter lending margins and weaker profitability as funding strains deepen and competition for deposits intensifies, raising risks for earnings and balance sheets at a time of rising economic uncertainty.

Fitch Ratings, Inc. said the gap between loan and deposit growth is forcing banks to rely more heavily on wholesale funding. “This raises system liquidity risks and leaves earnings more exposed to fluctuations in interest rates,” it said in an April report.

Maybank Securities Pte. Ltd. in February said optimism about credit expansion still holds, though pressure is building. A 15% to 16% credit growth is still reasonable, although it will create moderate pressure on liquidity, said Quan Trong Thanh, an analyst at the bank.

Deposit growth has lagged lending as banks chase market share, according to Fitch, pushing many lenders towards interbank borrowing and bond issuance to cover funding shortfalls.

A rising share of corporate loans, which usually earn lower yields than retail credit, is also weighing on net interest margins across the sector.

The State Bank of Vietnam set a credit growth target of 15% for 2026, below the outcome last year, signalling a more cautious stance. Maybank said banks should still be able to secure funding largely from customer deposits and bond sales, even as competition tightens.

Fitch warned that rapid credit expansion could steer lending towards lower-return or speculative activities, lifting the risk of asset-price corrections that could damage bank balance sheets.

The agency also flagged trade-related risks as Vietnam sits between US and China supply chains, cautioning that stricter enforcement could expose some exports to steep US tariffs if goods are deemed transhipped or reliant on Chinese inputs.

Questions to Ponder: