VIB - Management maintains high growth plan despite weak core earnings in H1 - Analyst Meeting Note

We attended VIB’s Q2 2026 analyst meeting on August 5. VIB reported H1 2026 TOI of VND11.2tn (+16.0% YoY) and PBT of VND5.2tn (+3.0% YoY), trailing our expectations. Overall, management is cautious about the challenging macro backdrop but nonetheless holds its 27% YoY PBT growth target, which requires 20% PBT growth in H2 2026 vs H1, given that H1 recorded one-off fee income. With retail demand still soft and lending rates yet to ease, the bank will focus more on the corporate segment in H2 to drive growth. We therefore see challenges in completing the full-year plan, though VIB's largely unused credit quota and funding pipeline should give it more headroom. 

Below are the highlights:

1. Macro view by the bank

• Management guides GDP to reach 8-10% for the full year, slightly below the Government double-digit target, citing tariff and geopolitical uncertainty with the US.
• H1 system credit grew 8.5% against the 15% full-year target, with real estate credit under close SBV monitoring. Management remains cautious about the upward pressure on domestic rates as credit outpaced deposits, with September the flagged pressure point. System liquidity is currently in “ease mode.”
• The VND was well managed in H1 but might potentially face depreciation pressure from foreign indirect investment outflows and a trade deficit that has emerged despite strong export growth.

2. Credit growth

• H1 2026 credit growth was 4.0% with FY2026 quota of 12-14%. Management guided to full utilization. 
• We see signs of VIB shifting further toward the corporate segment, as the bank announced it will launch its “VIB 3.0” strategic phase from 2027 to further optimizing profitability given its large retail client base. The bank will maintain its leading position in the credit card business and the retail portfolio; however, it will also grow the corporate segment contribution.
• Corporate and institutional lending is now 33% of the book and 67% retail & SME, against a peak retail concentration of near 90% in the past. The retail & SME share continues to fall QoQ from 70%, and the corporate segment is guided to grow 20% in 2026 as the more dynamic segment in H2, implying a further drop in the retail contribution in H2 2026. The corporate book is diversified across manufacturing, financial institutions, real estate, and transportation.
• Within the retail and SME book, mortgages remain the largest component at 54%. In absolute terms, the mortgage balance rose by only 3.6% in H1 2026 vs end-2025.
• VIB is becoming more active in the infrastructure segment given weak retail demand, participating in several road construction and renewable energy projects.

3. NIM

4. Funding & capital

• Customer deposits grew 8.0% in H1 2026, twice the pace of loan growth and ahead of the 6.2% industry average. We note, however, that VIB’s 2025 deposit balance fell unexpectedly at year-end, creating a lower base for 2026.
• A USD1bn soft funding pipeline from international institutions is targeted for H2, of which management is highly confident on USD500mn, with disbursement expected in Q3-Q4.

5. Non-interest income

• Net fee income of over VND3.0tn (+294% YoY) was the main driver of 16.0% TOI growth. The bank did not, however, give a specific explanation for this abnormal jump in fee income.
• VIB expects strong recovery income in H2 2026, guiding to VND2-3tn of write-off recoveries, supported by recent real estate law changes and the Resolution 42 framework.

6. Asset quality & risk management

• The NPL ratio (calculated by the bank) was 2.1% at H1 2026 (-10 bps compared to 2025), with FY2026 guidance of 2.0%. NPLs are driven mainly by the retail & SME segment, with a retail NPL ratio of 4.3% in Q2 2026 (+10bps QoQ), while the corporate segment’s NPL ratio was 0.2% (+20bps QoQ).
• Mortgage NPLs are trending negatively in Phu Quoc, My Thuan, and Da Nang, where the housing market is under pressure, alongside credit quality deterioration and rising NPLs in the construction sector.

7. Basel III adoption

• CAR: VIB’s CAR is currently 12.2% under Circular 14 (Basel III) on the standardized approach vs 11.3% under Circular 41 (Basel II). The higher CAR under Basel III is driven by the credit quality of the card portfolio and by qualified-collateral treatment (50% vs 100% risk weight), which cuts RWA for retail.
• Basel 3 IRB roadmap: the internal standardized approach was filed with the SBV in 2025; the first validation report was completed in H1 2026; a second validation is due in 2027; and a formal IRB application is planned for around November 2027, with approval expected roughly a year later.
• VIB already complies with the draft amendment to Circular 22/2019, meeting the required roadmap for CDR (<95%), NSFR (>100%), LCR, and the leverage ratio.

Powered by Froala Editor