Financial institutions are ramping up loans in response to increasing investments in real estate and stock markets, drawing a surge in capital.
Vietnam's leading banks, including VietinBank, Agribank, Vietcombank, and BIDV, have reported credit growth rates of around 10%, 7.6%, 7%, and 6% respectively, compared to the year's beginning [1]. This growth, while positive, is not uniform across the banking sector.
The total outstanding loans of 27 listed banks and the Bank for Agriculture and Rural Development (Agribank) stood at some VNĐ14.94 quadrillion (US$574.6 billion) by the end of the second quarter, marking a more than 10% increase compared to the end of 2024 [2]. Notably, MB, SHB, and HDBank have reported sharp increases in lending for the real estate sector, with rates of 34%, 28.4%, and 22% respectively compared to the start of 2025 [3].
However, the outstanding real estate credit in the banking system stands at approximately VNĐ3.18 quadrillion as of June 30, a 2.4 times increase compared to the end of 2024 and accounts for 18.5% of the system's total outstanding loans [4]. This concentration in the real estate sector raises concerns about potential risks.
Pham Thi Hoang Anh, Deputy Director of the Banking Academy's Board of Directors, has urged commercial banks to strike a balance between expanding loan portfolios and maintaining credit quality [5]. She emphasized that strong credit growth reflects opportunities for production and business investment, but excessive capital concentration in high-risk sectors like real estate and securities could increase risks of imbalances and non-performing loans [6].
Experts have warned that excessive capital concentration in real estate and the stock market could lead to financial stability risks, rising non-performing exposures, capital depletion from market and credit risks, and economic contagion and credit tightening [7]. If real estate or stock markets crash, this can affect borrowers’ wealth and collateral values, causing credit supply to tighten, impacting wider economic activity and not just the property or equity sectors.
To manage these risks, the State Bank of Vietnam (SBV) is closely monitoring safety indicators, with the ratio of short-term capital used for medium- and long-term loans still below the 30% threshold [8]. SBV's orientation is to tightly control credit flowing into risky sectors, prioritize capital for production, exports, manufacturing, green energy, and economic restructuring, while continuing to require credit institutions to keep deposit rates stable and further cut lending rates [9].
Meanwhile, Pham Thi Hoang Anh has suggested that medium- and long-term capital should be more strongly developed through the stock and bond markets to ease pressure on the banking system and improve the sustainability of credit [10]. Lower lending rates will stimulate both aggregate demand and supply, supporting sustainable growth [11].
In the midst of this cautious optimism, the Big 4 banks - BIDV, VietinBank, Vietcombank, and Agribank - dominated with a combined market share of over 50% [12]. At Techcombank, real estate business lending accounts for 59% of total outstanding loans, with consolidated real estate business credit increasing 21.5% compared to the start of 2025, nearly double the bank's overall growth rate of 11.6% [13].
The Party and Government's decisive changes regarding mechanisms, policies, and institutions have boosted confidence among both domestic and international investors, contributing to the overall growth of the banking sector in Vietnam.
[1] Vietnam News [2] VietnamNet Bridge [3] VietnamPlus [4] VnExpress [5] VnExpress [6] VnExpress [7] International Monetary Fund [8] VnExpress [9] VnExpress [10] VnExpress [11] VnExpress [12] VnExpress [13] VnExpress
- The government urges banks to balance loan expansion with credit quality to prevent risks in sectors like real estate and securities, which have seen excessive capital concentration.
- The State Bank of Vietnam (SBV) is closely monitoring indicators to control credit flowing into risky sectors and prioritize capital for production, exports, manufacturing, green energy, and economic restructuring.
- Experts warn that financial stability risks can arise from excessive capital concentration in real estate and the stock market, potentially leading to economic contagion and credit tightening.
- The Big 4 banks in Vietnam, including BIDV, VietinBank, Vietcombank, and Agribank, have a market share of over 50%, but some banks have reported sharp increases in lending for the real estate sector.
- The Party and Government's policy changes have boosted investor confidence, contributing to the overall growth of the banking sector in Vietnam, while also encouraging the development of medium- and long-term capital through the stock and bond markets.
