The net interest margin (NIM) for listed banks has declined to its lowest level since 2019, but experts expect this trend to reverse in the near future, thanks to positive developments in the current account savings account (CASA) ratio and expectations following the US Federal Reserve (Fed)’s interest rate cut.
According to figures from financial data provider WiChart, listed banks' NIM continued to narrow in Q2 2025 to 3.17 per cent, down 0.13 percentage points compared to the previous quarter, when capital costs increased faster than yield on earning assets. The level approached the bottom rate of 3.16 per cent recorded in Q1 2019.
Nguyễn Thế Minh, director of the Yuanta Securities Vietnam Company’s research and development division, said that the NIM's decreasing trend had continued for the past few years.
According to Minh, the main cause stems from the fact that the State Bank of Vietnam (SBV) is currently loosening monetary policy, as the Government has urgently required the SBV to maintain low interest rates to support economic recovery and prioritise growth.
Maintaining low interest rates has kept the NIM low.
The NIM decline has also come from a change in the banks’ capital raising methods. Previously, banks tended to raise capital from the international market through long-term US dollar-denominated loans with preferential capital costs, which helped them optimise NIM.
However, in the past few years, especially after 2023, dollar interest rates have increased to very high levels, causing banks to slow their borrowing in dollars from international large financial institutions.
Banks thus have to raise capital from domestic deposits. Meanwhile, the deposit interest rate has fluctuated in the same direction as lending interest rates, so the NIM has also decreased.
Analysts from Mirae Asset Securities Company say that as the Government reaffirms high economic growth targets and emphasises the key role of credit as a growth driver, the banking industry may face a thinner NIM phase.
However, the analysts expect banks’ NIM might see positive changes in the near future, as the Fed is due to start a cycle of interest rate cuts around September-October this year and continue this trend in 2026.
At the same time, domestic VNĐ interest rates, especially in the short term, are showing signs of recovery and are higher than the US dollar interest rates, which may contribute to NIM recovery in the future.
Experts also forecast that when investment demand returns amid a vibrant capital market, banks' CASA may improve, thereby actively supporting the improvement of NIM.
According to Minh, to improve NIM, banks should control the cost of capital inputs or the structure of raised capital sources. In fact, most banks are still dependent on short-term capital for medium- and long-term loans.
This dependence poses a big challenge, especially as the SBV maintains regulations on limiting the ratio of short-term capital used for medium- and long-term loans at a maximum of 30 per cent.
To ensure compliance with the SBV’s regulations and improve operational efficiency, banks are therefore forced to diversify and extend the term of capital sources.
According to experts, banks should increase medium- and long-term capital mobilisation through the issuance of long-term deposit certificates, issuing long-term bonds or increasing equity capital through the issuance of shares. — BIZHUB/VNS