Banks in Vietnam are increasingly turning to the bond market to fund a wave of accelerated loan growth, as rising credit demand outpaces deposit inflows and strains traditional funding sources.
According to a November 2025 sector report by the ratings agency Moody’s Ratings, loan growth in the Vietnamese banking sector has been strong since 2022 and is expected to accelerate further in 2026 under pressure from government directives aimed at supporting national economic growth targets.
However, deposit growth is unlikely to match the speed of credit expansion. As deposits lag behind loans, banks face tighter funding positions. To bridge the gap, many lenders plan to increase their dependence on market-based funding, including issuing more bonds.
The modest stock of high-quality liquid assets held by many banks limits their liquidity buffers, which in turn raises refinancing risk. The situation could prove especially challenging for smaller private banks that compete intensely for deposits and may struggle to absorb rising funding costs.
Despite the risks, strong profitability and stable capitalisation provide support for overall banking stability. Regulators are also likely to keep interest rates under control, which should help protect net interest margins for banks even amid increased reliance on bond issuance.
In effect, the shift toward bond financing marks a significant change in the funding profile of Vietnam’s banks — one driven by surging credit demand and the need to maintain liquidity as traditional deposit-based funding becomes insufficient.
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