Vietnam's Strategic Bank Restructuring and Monetary Policy Shifts: A Deep Dive into Acquiring Banks' Long-Term Potential

Vietnam's banking sector is undergoing a seismic transformation in 2025, driven by aggressive restructuring initiatives and a recalibration of monetary policy. For investors, this presents a unique opportunity to assess the long-term potential of acquiring banks—those institutions that have taken over distressed peers under the State Bank of Vietnam's (SBV) restructuring program. With preferential policies, regulatory clarity, and liquidity management tools in play, the sector is poised for a rebalancing that could unlock value for strategic investors.

Policy Tailwinds: Foreign Ownership and Structural Reforms

The cornerstone of Vietnam's 2025 reforms is Decree 69/2025/ND-CP, which raises foreign ownership limits in distressed credit institutions to 49% with Prime Ministerial approval. This directly benefits acquiring banks such as HDBank, VPBank, and Military Bank, which have absorbed weaker institutions under the SBV's restructuring plan. For foreign investors, this creates a rare window to acquire stakes in banks with expanded market share and streamlined balance sheets. The decree also clarifies definitions of foreign ownership, ensuring compliance with investment laws and preventing concentration risks.

Complementing this is Circular 07/2025/TT-BKHDT, which introduces a two-tier economic unit classification system. By standardizing data collection, the circular enhances transparency for investors, enabling more accurate assessments of sectoral performance and risk. This is critical for acquiring banks, as it allows investors to track post-merger integration and operational efficiency improvements.

Monetary Policy: Navigating Liquidity and Profitability

The SBV's 2025 monetary strategy has been a balancing act. While maintaining a 4.50% key interest rate to support credit growth, the central bank has injected liquidity through open market operations (OMO), injecting $2.45 billion in September 2025 alone. This has helped stabilize interbank rates and ease pressure on banks' net interest margins (NIMs), which had been squeezed by aggressive deposit rate hikes earlier in the year.

However, the low-rate environment poses a double-edged sword. While it fuels credit expansion—particularly in priority sectors like green energy and social housing—it also compresses margins. Ivan Tan of S&P Global Ratings notes that Vietnam's banks, with annual credit growth of 15-16%, face a cyclical dilemma: low rates weaken profitability, yet the economy's growth demands robust credit. For acquiring banks, the key will be leveraging scale and digital transformation to offset margin pressures.

Structural Risks and Opportunities

Despite the favorable policy environment, risks persist. Real estate exposure remains a concern, with some banks still overleveraged to the sector. Additionally, the underdeveloped secondary debt market—where 50% of bad debts are managed internally—limits liquidity for distressed assets. However, the legalisation of Resolution 42/2017/QH14 in 2025 is a game-changer. By streamlining NPL resolution, the reform is projected to reduce the sector's non-performing loan (NPL) ratio to below 3% by mid-2026, improving capital efficiency and attracting foreign capital.

Digital transformation is another critical lever. Banks like VPBank and VIB have already reduced operational costs through digital banking, boosting non-interest income. The SBV's push for non-cash payments has further accelerated this trend, with QR code transactions surging by 300% in 2024. Acquiring banks with strong digital infrastructure are well-positioned to capture market share in a competitive landscape.

Investment Thesis: Targeting Resilient Acquiring Banks

For long-term investors, the focus should be on acquiring banks that have successfully integrated distressed peers and demonstrated resilience in NPL management. HDBank and VPBank stand out, with capital adequacy ratios (CAR) above 12.63% and diversified funding sources. Their exposure to priority sectors—such as green energy and SME lending—also aligns with the SBV's credit growth targets.

Moreover, the SBV's plan to phase out credit growth quotas by 2026 will favor banks with strong capital buffers and efficient cost structures. This transition, combined with the liberalization of foreign ownership caps, creates a fertile ground for strategic acquisitions.

Conclusion: A Calculated Bet on Vietnam's Banking Future

Vietnam's 2025 reforms are a masterstroke of policy engineering, combining regulatory clarity, liquidity support, and structural modernization. For acquiring banks, the path to long-term profitability lies in leveraging preferential foreign ownership policies, digital innovation, and NPL resolution frameworks. While risks like real estate overexposure and margin compression remain, the sector's alignment with global financial standards and its proactive regulatory environment make it an attractive proposition for patient capital.

Investors should prioritize banks with robust digital ecosystems, low funding costs, and a clear strategy for NPL management. As Vietnam's banking sector transitions from crisis-driven restructuring to sustainable growth, the acquiring banks that navigate this shift successfully will emerge as regional powerhouses.