Vietnam’s HDBank has enough cushion against aggressive loan growth, tariff impact

Its NPL ratio remained mostly stable, and ROTA is higher than the market average.

Ho Chi Minh City Development JSC Bank’s (HDBank) stable profitability is expected to provide a cushion against asset risks from its aggressive loan growth and the impact of US tariffs, said Moody’s Ratings.

“We expect the bank's asset quality to be under pressure as strong loan growth will pose unseasoned risk,” the ratings agency wrote in its latest report of the Vietnam-based bank, where it changed HDBank’s outlook from stable to negative.

“In addition, the large import tariffs imposed by the US will hurt the country's near-term growth prospects, leading to financial stress for export-oriented industries and potentially hurting the banking sector's asset quality,” Moody’s warned.

The bank’s non-performing loan (NPL) ratio was 1.9% as of December 2024, compared to 1.8% a year earlier, lifted by a strong loan growth of 29% in 2024. This is higher than the 18% average loan growth of its peers.

Return on tangible assets (ROTA) averaged 1.8% from 2021 to 2024. ROTA increased to 1.9% for the year ended 31 December 2024, higher than the average of 1.5% for Vietnamese banks rated by Moody’s Ratings.

HDBank was notably helped by an improvement in net interest margin (NIM) from its increased focus on small and medium enterprises and retail segments.

Recent acquisition of Dong A Bank in January 2025— renamed to Vikki Bank by HDBank— is expected to be neutral in the next 12-18 months.

Despite the acquisition, Vikki Bank will remain an independent legal entity, and HDBank will not inject capital into it or consolidate its financials.

However, higher credit losses are expected to weigh down further NIM improvement.

The bank's high reliance on market funds and modest liquidity also pose risks, Moody’s said.

As of 31 December 2024, market funds as a percentage of tangible banking assets were elevated at 26%, whilst the share of high-quality liquid assets was a modest 9% of the bank's tangible banking assets.

In times of need, Moody’s expects moderate probability of support from the government of Vietnam.

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