Tariffs and the Resilience of Vietnam’s Banking Sector
In recent analyses of Vietnam’s financial landscape, S&P Global Ratings has expressed optimism regarding the direct impact of tariffs on the country’s banking sector. According to the agency, any adverse effects should remain manageable, allowing financial institutions to navigate through potential trade uncertainties while continuing to thrive.
Economic Growth Forecasts
Vietnam’s economy is projected to grow by 5.9% in 2025 and 6% in 2026, significantly outpacing the Asia-Pacific (APAC) region’s anticipated growth of just 4.1%. This robust economic trajectory has been bolstered by strong investments and an improving domestic environment. S&P notes, “Vietnam’s strong economic growth in recent years has surpassed that of many of its regional peers,” indicating confidence in the country’s ability to sustain this growth over the next 12 to 24 months.
Benefits for Key Financial Institutions
Major players in Vietnam’s banking sector, such as the Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank), and Vietnam Export Import Commercial Joint Stock Bank (Vietnam Eximbank), are poised to benefit from this economic momentum. As the country experiences GDP growth and robust foreign direct investment (FDI) inflows, these institutions stand to enhance their market positions and operational resilience.
Administrative Reforms and Financial Regulation
Vietnam’s commitment to sweeping administrative and provincial reforms is another pivotal element impacting its banking sector. S&P underscores the significance of strengthening financial sector rules and regulations, which could yield positive results in coming years. The implementation of new laws on collateral enforcement, set to take effect in October 2025, is particularly noteworthy, as it aims to enhance banks’ capacities to manage nonperforming loans (NPLs).
Nonperforming Loans (NPLs) and Asset Quality
The banking sector is witnessing an encouraging trend in loan performance, with the ratio of NPLs improving from 4.5% in 2023 to 4.1% in 2024. This uptick in quality is likely attributed to a rebound in the real estate sector, recent interest rate cuts that improve borrowers’ repayment capabilities, and the overall effect of a strong loan growth denominator. S&P’s evaluation suggests that these ongoing institutional reforms will further bolster asset quality across the board.
Tariff Implications on the Banking Sector
While concerns about tariffs loom large in many economies, S&P believes the direct impact on Vietnam’s banking sector will be limited. It estimates that loans to the export sector make up only about 3% to 5% of total banking loans. With the recent tariff rate decrease for exports to the U.S. from an announced 46% in April 2025 to a more manageable 20%, the financial exposure is less daunting than initially perceived.
The Stability of Banks’ Deposit Bases
Another reassuring factor for the banking sector is the stability of banks’ deposit bases, which tend to be resilient across economic cycles. Over the past five years, the domestic savings rate has consistently hovered between 35% and 37% of GDP. This robust savings behavior offers a substantial buffer, enhancing the resilience of banks against economic fluctuations.
Conclusion: A Bright Future Ahead
As Vietnam navigates challenges from global tariffs and trade uncertainties, the foundations of its banking sector appear strong and adaptable. Supported by a promising economic outlook, ongoing reforms, and stable financial metrics, Vietnam’s financial institutions are strategically positioned to weather potential storms ahead, continuing their trajectory of growth and stability.