The three, all state-owned and listed and the country’s largest by assets, Vietcombank, Vietinbank and BIDV, account for 34 percent of all loans outstanding, securities company VDSC said in a note last week.

But this represents a 2.74-percentage-point fall even as the four largest non-state banks, Techcombank, VPBank, Military Bank (32.42 percent state-owned), and ACB, increased their share of loans outstanding by 1.6 percentage points.

During the two years ending in the third quarter of 2020, VietinBank’s share fell by 1.96 percentage points, BIDV’s by 0.7 percent and VCB’s by less than 0.1 percent.

The big fall in VietinBank's market share is because it has been strapped for cash. There have been no major infusions of capital in the past few years, return on equity has been low, bonuses and employee welfare funds cause a big drain on resources, and the government appropriates much of its earnings.

This situation has been exacerbated by Basel II standards, which prescribe a capital adequacy ratio (CAR) of 8 percent of risk-weighted assets for all financial institutions. Thus, to lend more, banks have to increase their charter capital.

Though the Government has agreed to reduce its ownership in state-owned banks from 65 percent to 51 percent by 2025, it has yet to be implemented.

But the government issued a decree in October allowing state-owned banks to pay dividends in stocks to increase their capital, helping them improve their growth prospects in the medium and long terms.

According to the State Bank of Vietnam, banks’ total outstanding loans were worth VND8.69 quadrillion ($376.87 billion) at the end of the third quarter.

Credit growth is expected to be 11 percent in 2020, down from 13.5 percent in the previous year.