Flagship report Bank margins and asset quality, foreign portfolio flows and the re-rating case for Vietnam's large caps now that the FTSE upgrade has taken effect.
1. Macro backdrop and liquidity drivers
Heading into late 2026, the State Bank of Vietnam has kept the refinancing rate at 4.5% and the rediscount rate at 3.0%, but market rates have moved higher. The average deposit rate on new transactions reached 6.38% on 20 September 2026, about 1.15 percentage points above end-2025, as credit grew faster than deposits. Between 18 and 21 October 2026 the SBV told banks to cut deposit rates on tenors of six months and longer by at least 0.5 points. In the interbank market, the overnight rate stood at 4.31% a year on 22 October 2026.
The USD/VND rate has been relatively steady: the interbank rate at end-September was about 1.17% below end-2025. However, merchandise trade ran a nine-month deficit of about USD 19.42 billion, so the external buffer is thinner than in years of large surpluses. With savings rates rising, idle cash has more alternatives to equities, which makes flows into the large-cap VN30 basket more dependent on the earnings outlook. The broader backdrop is covered in Vietnam rates and FX in late 2026.
2. Bank margins and asset quality
Vietnamese commercial banks show a clear split in margins and provisioning buffers. Lenders with higher asset yields such as MB and Techcombank keep NIM above 3.5%, while the state-owned banks run lower margins but with low NPL ratios and thick provisioning buffers.
| Metric | VCB | MBB | TCB | CTG |
|---|---|---|---|---|
| Data period | Q2 2026 | Q2 2026 | Q3 2026 | Q2 2026 |
| Net interest margin (NIM) | Close to 3% (MBS Q3 estimate) | 4.16% | 3.5% | 2.90% |
| NPL ratio | 0.61% | Not stated in source | 1.36% | 1.20% |
| NPL coverage | 279% | Above 97% | About 107% | 134.0% |
Sources: Vietcombank via DNSE, MBS via Doc Nhanh; MB and Techcombank results releases; VietinBank per TCBS.
Provisioning buffers are uneven: Vietcombank keeps the highest coverage in the group, VietinBank’s coverage fell from 167.2% to 134.0% in Q2, and Techcombank’s stood at about 107% as its Q3 NPL ratio rose to 1.36%. Asset quality therefore remains a variable to watch when judging how far bank valuations can re-rate.
3. The re-rating case after the market upgrade
One of the largest drivers for Vietnamese equities in this phase is FTSE Russell’s reclassification of Vietnam from Frontier to Secondary Emerging market status, effective 21 September 2026 and implemented in several tranches.
The Non-Pre-funding Solution (NPS) and the global-broker trading model are among the reforms FTSE recognised. In HSC’s base case, total passive inflows over the full phase-in come to about USD 1.509 billion, with roughly USD 150.9 million in the first tranche, spread across the stocks in the FTSE baskets rather than VN30 alone. The details are in Vietnam one month after the FTSE upgrade.
4. Conclusion and portfolio positioning
With VN-Index at about 11.6x trailing earnings, the earnings yield is roughly 8.6%, above the 6.38% average deposit rate, but the premium has narrowed as deposit rates rose. In the base case, the companies most exposed to a re-rating are sector leaders with three traits:
- Healthy free cash flow and low financial leverage.
- Direct exposure to technology adoption and digital transformation (such as FPT).
- Leadership positions that capture the recovery in domestic consumption and public investment.
Sources
- Chinhphu.vn: SBV: the pace of rate increases is slowing (Vietnamese)
- Chinhphu.vn: SBV meets credit institutions, asks for lower rates (Vietnamese)
- Thoi bao Tai chinh Viet Nam: Money market, week of 19–23 October (Vietnamese)
- National Statistics Office: Socio-economic report for Q3 and nine months of 2026 (Vietnamese)
- DNSE: Vietcombank reports record profit (Vietnamese)
- Doc Nhanh: Bank earnings in Q3 2026 (Vietnamese, citing MBS)
- CVS News: MB earns over VND 20,188 billion in H1 2026 (Vietnamese)
- Techcombank: 3Q26 Press Release
- TCBS: CTG Q2 2026 results update (Vietnamese)
- HSC: FTSE Russell raises VN weight, boosting inflows
- VNDirect: Market compass, week of 19–23 October 2026 (Vietnamese)
- VNDirect: Market Strategy October 2026
