High loan growth and weaker profitability weighs on Vietnam’s TPBank

Planned injection in a securities company affiliate will also weaken overall capitalization.

Tien Phong Commercial Joint Stock Bank (TPBank) faces challenges to rebuilding its loan absorption buffers due to its rapid loan growth and weaker profitability.

The Vietnamese bank’s nonperforming loans (NPL) ratio rose to 2% in June 2025, from just 1.5% in December 2024 on higher delinquencies in retail and corporate loans. Its exposure to construction and the real estate sector will also continue to pose asset risks, warned Moody’s Ratings.

“We expect asset quality pressures for TPBank to remain elevated as unseasoned risk from its high loan growth materializes over the next 12-18 months,” Moody’s wrote in its latest ratings report of the bank, where it downgraded TPBank’s bank deposit and issuer ratings to B1 from Ba3.

This meant that Moody’s sees TPBank as “subject to high credit risk”, from “substantial credit risk” previously.

Moody’s noted the weakened debt servicing capacity of some of TPBank’s large corporate borrowers.

“The decline in the NPL coverage ratio to 63% from 81% over the same period will provide modest buffers against future losses,” it added.

Profitability will remain under negative pressure through 2026 given expectations that its net interest margins (NIM) will narrow, and increase in credit costs, Moody’s added.Cash dividends and high loan growth also constrained TPBank’s ability to strengthen its core capitalisation buffer over the past two years.

“In addition, TPBank's planned capital injection in Tien Phong Securities Joint Stock Company (TPS), a securities company affiliated with the bank, will also weaken overall capitalization,” the report said.

The prosecution of TPBank's former vice chairman, who was also TPS's chairman, on fraud charges is credit negative and highlights governance risks, it added.