What models are Vietnamese banks making money under?

\>> Article in the Topic "Vietnamese banking panorama: From financial statements to economic pulse"

Behind the profit numbers are very different strategies

From the outside, the banking industry is often evaluated through familiar indicators such as profit, credit growth or asset scale. However, these numbers only reflect the final results. To understand how a bank really operates, it is necessary to look deeper into the business model behind it.

Data for the first quarter of 2026 shows that despite operating in the same legal framework and trading in the same core product, currency, Vietnamese banks are choosing very different paths to create profits. There are banks that build advantages from cheap capital and superior asset quality. Some banks accept higher risks in exchange for attractive profit margins. And there are also banks that are still struggling with the problem of raising capital or dealing with backlogs from the past.

When setting targets such as cost of capital (COF), asset yield (Asset Yield), net interest margin (NIM), rate Bad debt ratio (NPL) and CASA ratio on the same plane of analysis, the picture of differentiation of the banking system becomes clearer than ever.

The banking group lives well thanks to the advantage of cheap capital.

Vietcombank is the most typical representative. With a capital cost of only about 3.4%, the lowest in the system, this bank almost does not have to participate in the deposit interest rate race. That advantage allows Vietcombank to choose the best customers, from large corporations, FDI enterprises to individual customer groups with high quality guaranteed assets.

VietinBank and BIDV are also in this group with capital costs of about 4.9% and 5.1%, respectively. Although asset yields are not too high, in return they maintain a low bad debt ratio and outstanding risk control ability.

In the private banking sector, MBBank and Techcombank are two special cases. Not possessing state advantages like the Big 4, but these two banks have built the highest CASA foundation in the system, both over 32%. Thanks to that, capital costs are still maintained at a competitive level despite the very large mobilisation scale.

The common point of this group is that they do not need to lend at very high interest rates to make a profit. Instead, they make money with large scale, good asset quality and low capital costs. This is a highly defensive model but also very difficult to copy (the group has a green indicator in the interactive chart at the end of this article).

Group 1 Index Table: Defensive - Cheap Capital Advantage

Group accepts risks in exchange for high profit margins

If the first group represents safety, the second group pursues a completely different philosophy.

VPBank, HDBank, MSB or TPBank selects customer segments with higher profitability than the general average. It could be consumer credit, individual customers, small and medium enterprises or areas with a greater level of risk.

As a result, the asset yield of this group is among the highest in the system. HDBank reached 13.4%, MSB reached 12.8% and VPBank reached 12.4%. These are numbers that state-owned banks can hardly achieve.

High yield helps raise net profit margin to a very attractive level. VPBank currently owns NIM more than 5.4%, the highest in the industry. HDBank also maintains NIM above 4.5%, far exceeding the general level.

However, there is no free lunch in the banking industry.

To finance high-yield loans, this group must accept larger capital costs. VPBank has a COF of about 8.5%, TPBank nearly 8.8%, significantly higher than Vietcombank or VietinBank.

More importantly, the bad debt ratio of this group is also often higher than the general average. VPBank recorded NPL at about 3.6%, HDBank at 2.6% and TPBank over 2.2%.

That explains why these banks often have to spend a significant part of their profits on risk provisions. They accept the trade-off between profit and risk to maintain higher growth rates.

Index of typical representatives of Group 2: Attack - High profit margin

Banks that are under the greatest pressure on capital resources

In addition to the two relatively clear models mentioned above, the banking system also exists another group with its own challenges.

These are banks that are smaller in scale or have not yet built a strong enough CASA platform.

Nam A Bank, VietBank or BaoViet Bank are typical examples. The CASA ratio of this group only ranges from about 3% to 7%, much lower than MBBank or Techcombank.

When they do not own cheap capital, they are forced to compete with mobilisation interest rates. As a result, capital costs were pushed to very high levels. Nam A Bank currently has a COF of about 11%, VietBank more than 10.5% and BaoViet Bank nearly 10%.

To offset expensive input costs, these banks must look for loans with higher yields. However, the bottom line did not improve accordingly because most of the benefit was absorbed by capital costs.

This is the vicious cycle that many small-sized banks are facing: lack of CASA leads to high capital costs, while high capital costs limit competitiveness.

Index of some representatives of Group 3: Mobilisation pressure & Challenge

When bad debt becomes a drag on the business model

Sacombank is a typical case. Sacombank currently records a rate of over 6.6%. This means that a significant portion of the bank's capital is in assets that do not generate income.

With Sacombank, the actual cost of capital is not too high. However, the pressure to handle bad debts causes profits to be significantly shared with provision costs. In other words, the bank still makes money but cannot fully convert it into profit for shareholders.

This is an example that shows that the banking business model is not only determined by the ability to mobilise capital or lend, but also depends greatly on the quality of assets formed in the past.

There is no absolutely perfect model.

Vietcombank, VietinBank, BIDV, Techcombank or MBBank groups build advantages from cheap capital and good asset quality. VPBank, HDBank or TPBank groups pursue high yields to create outstanding profit margins. Meanwhile, many smaller banks are still making efforts to improve their capital structure or deal with historical backlogs.

Each model has its own advantages and limitations. The defensive model helps maintain stability but is difficult to create sudden growth. The attack model can yield higher profits but at the same time requires greater risk. Banks that are under pressure on capital or bad debt will need more time to build a sustainable competitive advantage.

From an investor's perspective, what is important is not just how much profit the bank is making. The more important question is how they are making money. Because it is the business model that determines the bank's growth ability and resilience in different economic cycles.

And that is also the reason why behind seemingly similar profit numbers are very different strategies that are shaping the future of Vietnam's banking industry.

Operating Model Analysis 27 Banks Q1/2026

STRATEGIC MAP 27 COMMERCIAL BANKS

Analyzed and annualized data based on Financial Report Quarter 1/2026

Group 1: Defence - Cheap capital advantage

COF optimal, high CASA ratio (VCB, CTG, BID, TCB, MBB, ACB). Solid capital flow safety margin.

Group 2: Attack - High Profit Margin

Accept higher COF in exchange for superior Asset Yield (VPB, HDB, MSB, TPB). Dynamic growth model.

Group 3: Mobilisation pressure & Challenges

COF is at a high level but Yield is not adequate, or facing high bad debt pressure (Large bad debt codes: STB, NVB).

\* The size of the bubbles represents the size of the Bad Debt ratio (NPL %) of each bank.

Bank code ↕

COF (%) ↕

Yield (%) ↕

NIM (%) ↕

NPL (%) ↕

CASA (%) ↕

Classification

VCB

3.4%

7.4%

2.7%

0.6%

32.9%

Group 1

CTG

4.9%

8.4%

2.7%

1.0%

24.5%

Group 1

BID

5.1%

7.2%

2.1%

1.8%

19.7%

Group 1

MBB

6.2%

10.5%

4.1%

1.4%

33.0%

Group 1

TCB

6.8%

10.0%

3.8%

1.1%

32.6%

Group 1

ACB

7.2%

9.8%

2.9%

1.0%

21.8%

Group 1

VPB

8.5%

12.4%

5.4%

3.6%

13.9%

Group 2

HDB

7.4%

13.4%

4.5%

2.6%

10.3%

Group 2

MSB

7.4%

12.8%

3.4%

2.3%

26.3%

Group 2

TPB

8.8%

11.9%

3.1%

2.2%

20.0%

Group 2

OCB

9.6%

12.4%

3.1%

3.7%

10.9%

Group 3

SSB

9.8%

11.8%

2.7%

2.5%

10.9%

Group 3

BVB

9.9%

13.4%

2.6%

3.1%

7.1%

Group 3

VBB

10.5%

12.2%

1.9%

3.4%

3.4%

Group 3

NAB

11.0%

13.9%

2.7%

1.9%

6.0%

Group 3

STB

6.1%

10.0%

3.3%

6.6%

16.0%

Group 3

NVB

6.4%

10.2%

2.4%

7.3%

7.8%

Group 3

SHB

7.8%

11.1%

2.5%

2.6%

7.0%

Group 3

LPB

8.0%

10.8%

3.1%

1.7%

6.5%

Group 3

VIB

8.0%

10.9%

3.1%

2.9%

14.1%

Group 3

ABB

8.1%

13.6%

2.5%

0.8%

7.9%

Group 3

BAB

8.8%

12.0%

2.0%

1.6%

3.2%

Group 3

PGB

7.3%

12.0%

2.4%

4.0%

17.3%

Group 3

SGB

5.8%

10.6%

2.2%

3.5%

7.7%

Group 3

KLB

7.2%

12.4%

4.0%

1.8%

5.9%

Group 2

VAB

7.0%

11.0%

2.7%

1.3%

4.8%

Group 3

EIB

6.2%

9.0%

2.4%

3.1%

13.7%

Group 3

\>> Article in the Topic "Vietnam Bank Panorama: From financial statements to economic pulse"

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Source: TheLeader — theleader.vn. The article is reposted for the purpose of sharing knowledge for the founder and investor community in the ecosystem HCM VIF.