AsemconnectVietnam - With deposit interest rates rising sharply, while lending interest rates are unlikely to increase proportionally due to industry competition and the need to support the economy, maintaining the net interest margin (NIM) for banks has become a challenge.

Barriers from the Cost of Capital
2026 is expected to be a breakthrough year for the banking industry, with pre-tax profits across the sector projected to grow by approximately 19-20% compared to the previous year. The main drivers of this growth come from sustained high credit demand and improvements in macroeconomic factors. VCBS forecasts credit growth could reach 16-18%. Vietcap is even more optimistic, projecting nearly 20%. Factors expected to drive high credit growth include loose monetary policy, low policy interest rates, the recovery of the consumer credit segment, home loans, and public investment in real estate…
However, alongside the growth in credit volume, the net interest margin (NIM) is a variable that sparks much debate. While some expect NIM to bottom out and rise, many financial experts warn of pressure to tighten profit margins due to rising capital costs…
From the perspective of Assoc. Prof. Dr. Nguyen Huu Huan, lecturer at the University of Economics Ho Chi Minh City, despite the prospect of recovery, the NIM of the entire banking sector in 2026 will still face significant pressure, stemming from both internal system factors and the monetary market context. Notably, savings interest rates tend to continue rising, while lending interest rates are unlikely to increase significantly.
According to Mr. Huan, the downward trend in Net Interest Margin (NIM) is certain to be long-term and will become increasingly evident in the future, as competitive pressure among banks and the need to support the economy make maintaining the previously high NIM levels challenging. This decline may not be entirely a passive development, meaning banks are not being forced to reduce their NIM by the market, but rather they are proactively accepting thinner NIMs to pursue the goal of enhancing competitiveness, maintaining low lending interest rates to attract new customers and retain existing borrowers, thereby increasing the scale and market share of credit…
Meanwhile, according to analysis by experts at Agriseco Securities Company, in the early part of 2026, NIM will still be under pressure due to rising capital costs. Banks are facing fierce competition in attracting deposits, leading to the need to increase deposit interest rates. In particular, many banks have had to increase their fundraising through securities at higher costs to ensure they meet capital buffer requirements.
Another major risk pointed out by Vina Capital is that the actual loan-to-deposit ratio (LDR) of the system is very high, reaching approximately 110% if only considering customer deposits. This is the highest level in the past decade. When the LDR is strained, liquidity pressure forces banks to engage in a race to increase deposit interest rates to attract deposits, thereby significantly narrowing profit margins. Banks with inflexible capital mobilization structures or unsustainable LDR ratios will face the most challenges in protecting their Net Interest Margin (NIM)...
Furthermore, according to analysts, interest rates in the interbank money market are likely to remain high until at least the end of April 2026 because the State Bank of Vietnam needs to reduce pressure on the USD/VND exchange rate in the context of less abundant foreign exchange reserves. Maintaining high interbank interest rates will directly push up the cost of capital for banks dependent on this source, making it difficult to maintain Net Interest Margin (NIM).
The Role of CASA and Digitalization
Despite the pressures, experts still see positive scenarios for NIM, based on the shift in lending structure and the recovery of economic demand. For example, VCBS expects the NIM of the entire banking sector to improve by 0.5 - 0.7 percentage points in 2026. This recovery stems from strong credit demand and a shift towards the retail and SME segments.
Meanwhile, Vietcap believes that NIM will increase slightly from 3.14% in 2025 to approximately 3.23% in 2026 thanks to a less competitive lending interest rate environment and increased disbursement of medium and long-term capital. However, overall, the NIM of the entire banking sector is unlikely to achieve a breakthrough due to the continued high level of deposit interest rates.
Therefore, promoting digital services is expected to help increase the CASA ratio. Cheap capital from CASA is a key factor in helping banks minimize average cost of capital, thereby optimizing Net Interest Margin (NIM).
At Techcombank, by the end of 2025, customer deposits increased by 17.9% compared to the end of 2024; of which, CASA accounted for 40.4% of total customer deposits, with CASA balances increasing by 16.6% year-on-year, reaching VND 268,700 billion. CASA from the individual customer segment, including automatically earning balances, increased by 17.7% year-on-year; while CASA from businesses increased by 14.8% year-on-year. This partly impacted NIM, contributing positively to the VND 32,500 billion pre-tax profit recorded by the bank last year.
The pressures and opportunities for Net Interest Margin (NIM) in 2026 will be clearly differentiated among banks, based on their size, customer base, and asset quality. State-owned banks (BIDV, VietinBank, Vietcombank) are expected to maintain a stable but lower NIM than the average, fluctuating around 2.9-3%. Although they have the prospect of expanding NIM from the second half of 2026 thanks to good asset quality, this group still faces pressure to maintain low lending interest rates to support customers and the economy, making a significant breakthrough in NIM unlikely.
For private joint-stock banks, large-scale banks such as MB, Techcombank, VPBank, HDBank, etc., are expected to recover their NIM, with an average potentially exceeding 4.6%, thanks to their diverse ecosystems, abundant individual customer base, ability to optimize capital sources, and increased proportion of retail and SME lending with high profitability. At the same time, these banks have high CASA ratios, enabling effective management of capital costs, and especially a mechanism that prioritizes credit growth for banks that are subject to mandatory transfers or have high CAR ratios. Conversely, the group of small-scale banks is projected to face more difficulties in 2026. After strong growth in 2025 thanks to a low base, this group of banks is expected to experience slower growth. Pressure from high bad debt risk and new regulations restricting credit may force them to increase provisions, directly impacting profits and net interest margins.
One crucial factor to consider when discussing Net Interest Margin (NIM) is credit costs and bad debts. According to Dr. Chau Dinh Linh from the Ho Chi Minh City University of Banking, although the NIM ratio in 2026 is projected to remain under control thanks to economic recovery, risks still exist that could erode NIM gains. These risks could stem from the increased lending to the real estate sector in 2025, leading to a concentration of risk in this area. Furthermore, as home loans expire and interest rates shift to floating rates (around 12-14% per year at some banks), the repayment pressure on individual customers increases, posing a risk of overdue payments. Therefore, banks with low NIM coverage ratios and high proportions of corporate loans/corporate bonds will face significant provisioning pressure, reducing the effectiveness of NIM improvement. Conversely, banks with strong reserve buffers and a diversified customer base will be better able to control credit costs, protecting their profit gains.
Another technical factor impacting NIM is the sharp increase in the ratio of short-term capital used for medium and long-term loans at many banks. This leaves little room to increase the proportion of high-yield medium and long-term loans, limiting the ability to optimize the structure of income-generating assets to improve NIM in 2026.
N.Nga
Source: VITIC/Tinnhanhchungkhoan