Banking Sector: Positive Credit Growth

In Q2/2025, system-wide credit growth accelerated significantly thanks to a low-interest-rate environment and accommodative monetary policies supporting the 8% GDP growth target. As of June 16, credit had grown by 6.99% year-to-date, far surpassing the 3.75% growth over the same period in 2024.

Joint-stock commercial banks led the growth, with banks such as TCB, MSB, EIB, VPB, SHB, etc., continuing their strong momentum from Q1/2025. The main driver remains high borrowing demand from businesses, attracted by favorable capital costs. Net Interest Margin (NIM) in Q2 is projected to remain steady compared to Q1, as lending rates hold stable while deposit rates may slightly decline due to strong deposit growth.

As of mid-June, deposits increased 5.09% year-to-date, significantly higher than the 0.92% increase in the same period of 2024. This helps reduce interest rate competition and supports stable NIMs. Accordingly, the after-tax profit of listed joint-stock commercial banks is forecast to grow by approximately 14.7% YoY in Q2/2025, higher than the 11.0% in Q1. Banks with strong profit growth outlooks include TCB, VPB, CTG, and EIB, thanks to robust credit growth and improved NIMs.

On the policy side, Decree 69/2025/NĐ-CP allows for increasing the foreign ownership limit to 49% at banks undergoing mandatory restructuring (e.g., VPB, MBB, HDB), creating headroom for capital increases, although not urgently needed as these banks still maintain high CARs.

The legalization of Resolution 42 will help the sector handle non-performing loans (NPLs) more effectively, particularly benefiting banks with high provisioning costs such as CTG, VPB, and smaller banks like OCB, MSB, and VIB.

Real Estate Sector: Supported by Pipeline Projects

In the first half of 2025, the real estate (RE) market in Hanoi showed clear segmentation. The low-rise segment saw positive growth in both supply and absorption, while the high-rise segment stagnated due to concentrated supply in the eastern zone. In Ho Chi Minh City, apartment supply in Q1/2025 fell 36% YoY as developers limited new launches, though absorption remained high thanks to solid demand. In landed residential projects, supply rose slightly, but the absorption rate reached only 53% due to persistently high prices.

Entering Q2/2025, the market saw several positive developments: FDI into the real estate sector rose sharply, accounting for 25.9% of total registered capital, the legal framework has improved, and many major projects were approved (e.g., Aqua City, Dong Nai's C4 subdivision, and 148 projects in Hanoi).

News on provincial mergers has also fuelled expectations for infrastructure development and boosted the real estate outlook. However, Q2 earnings of residential real estate companies are not expected to see major breakthroughs due to a low volume of delivered products. MBS forecasts a more optimistic outlook for H2/2025 as a series of pipeline projects are expected to be delivered during this period.

Industrial Real Estate: Awaiting Trade Negotiation Results

In the industrial real estate segment, companies are awaiting trade deal outcomes. According to the General Statistics Office (under the Ministry of Finance), FDI into Vietnam in the first five months of 2025 reached USD 18.39 billion, up 51.2% YoY. However, newly registered capital dropped by 13.2% to USD 7.02 billion, indicating investor caution due to tariff policy risks and that new investors are waiting for the outcome of US–Vietnam trade negotiations.

In Q2/2025, MBS noted that the profits of industrial park real estate companies stem mainly from previously signed MOUs, ahead of the U.S. policy announcement. Therefore, profits at BCM, IDC, and SZC are expected to remain flat, while KBC's profit is forecast to grow by 59% YoY due to land lease contracts being recorded during the quarter.

With the above positive earnings outlooks, these two sectors are expected to continue attracting investment flows for the rest of 2025. As a result, MBS recommends that investors continue holding banking and real estate stocks, the two sectors with the largest market capitalizations on the Vietnamese stock exchange.