The report pointed out that state-owned and large private-sector banks are better positioned to withstand tighter funding conditions compared to smaller banks.

Policymakers face trade-offs in managing liquidity and supporting economic growth against ensuring macroeconomic and financial system stability, particularly amid rising energy prices. The policy path is likely to shape the long-term sustainability of banks’ funding structures.

Deposit growth has lagged loan growth as banks compete for market share. This has seen tighter funding conditions across the sector, with smaller banks under the most pressure, and many banks are increasingly turning to the interbank market and bond issuance to bridge funding gaps. Fitch Ratings believes this raises system liquidity risks and leaves earnings more exposed to fluctuations in interest rates.

Exchange-rate weakness and cross-border yield differentials are likely to keep funding conditions tight, while a rising share of corporate lending, which typically earns lower yields, are also squeezing net interest margins. An expansion of the State Bank of Vietnam’s 2026 credit-growth quota could intensify deposit competition and further compress margins.

Higher loan/deposit ratios or greater reliance on wholesale funding may further weaken banks’ funding, liquidity scores and, in some cases, lead to Viability Rating downgrades. However, most bank Issuer Default Ratings are driven by Fitch Ratings' expectation of government support.