Vietnam CBank official: Banking system NPLs remain contained

Vietnam’s banking system continues to manage non-performing loans (NPLs) within acceptable limits, according to recent reports and official assessments. As of March 31, 28 banks that have disclosed data reported total outstanding loans exceeding $492 billion, with NPLs reaching $10.65 billion, representing a 16 per cent increase from the start of the year. Despite this rise, the NPL ratio remains relatively stable, reflecting the sector’s ongoing efforts to balance credit expansion with risk management.

Credit growth for listed banks reached 3.76 per cent by the end of Q1 2025, contributing to SBV's annual target. Deposit growth, while lagging behind credit expansion, has shown signs of improvement, with customer deposits rising 2.4 per cent and mobilisation through valuable papers increasing by 11 per cent. However, the net interest margin declined by 30 basis points in the first quarter, pressured by falling asset yields and rising funding costs.

The SBV has highlighted several factors contributing to the recent rise in NPLs, including global economic uncertainties, domestic market sluggishness, and underdeveloped debt trading mechanisms. Legal challenges, particularly incomplete codification of Resolution No.42, continue to hinder effective NPL resolution. Analysts stress the need for a comprehensive legal framework to address bad debt issues, especially as 8 per cent GDP growth target.