Imbalance still to be addressed in finance

Imbalance still to be addressed in finance

Vietnam’s financial system has grown rapidly over the past decade, yet persistent structural imbalances and an over-reliance on bank credit highlight the urgent need to develop capital markets and professional personal financial advisory services.

At the Personal Financial Planning Forum organised by the Vietnam Financial Consulting Association (VFCA) in late August, Dr. Can Van Luc, chief economist of BIDV and member of the National Financial and Monetary Policy Advisory Council, said the system’s total assets now exceed $1.2 trillion, equivalent to 265 per cent of GDP.

“By international standards, this figure comprises the total assets of credit institutions, stock market capitalisation, bond outstanding balance, and insurance premium revenues. Between 2011 and 2024, the financial system grew at an average annual rate of 16 per cent, more than double the pace of GDP growth at around 6 per cent per year,” Luc said.

“Despite rapid growth, the size of Vietnam’s financial system is still only average by global standards. In China, this ratio reaches 400 per cent of GDP, while in Japan, South Korea, and Singapore it is even higher,” he said.

The imbalance is most visible in capital supply for the economy. The banking system accounts for about 66 per cent of total financial assets, bonds 11 per cent, insurance less than 1 per cent, and the stock market nearly 22 per cent.

However, banks provided as much as half of all capital for the economy in 2024, and the share rose further to nearly 59 per cent in the first half of 2025, highlighting the over-reliance on credit institutions.

At the same time, the stock market has grown strongly in terms of participation, with more than 10.4 million investors now active, yet capital mobilisation remains limited. In 2024, securities accounted for just 3 per cent of total funding, falling to below 1 per cent in the first six months of 2025, a level comparable only to that of a small bank.

“The challenge is how to make the stock market a genuine source of funding for production and business, rather than merely a playground for speculation,” Luc said.

Other segments of the financial system have also not fulfilled their potential. Private enterprises contribute only around 10 per cent of registered capital in practice, equal to less than 5 per cent of total investment. Insurance premium revenues currently account for 2.3 per cent of GDP, lower than the ASEAN average of 3.5 per cent.

Vietnam’s financial market has also become increasingly competitive with the presence of banks, finance companies, leasing firms, fintech enterprises, 1,200 people’s credit funds, and peer-to-peer lending. Deposits from individuals in banks have reached around $580 billion, while outstanding loans stand at about $696 billion, reflecting the large capital demand of the economy.

Against this backdrop, the development of personal financial consultancy is seen as an essential factor to both strengthen capital markets and support the growth of individual investors.

“The actual demand for professional financial consultants in Vietnam is enormous. However, the profession is still in its infancy and faces many challenges,” Luc added.

Dr. Le Minh Nghia, chairman of the VFCA, highlighted that Vietnam’s financial system is built on public, corporate, and personal finance. While the first two have been systematically studied and supported, personal finance has been neglected, even though it directly affects every citizen.

“As a result, the three pillars of Vietnam’s financial system are uneven, and even giving rise to black credit,” he noted. “Personal finance has only received more attention since 2023, when some universities and social organisations began to introduce the subject into training programmes. Yet compared with actual demand, particularly in the context of AI and digital transformation, financial education for individuals remains inadequate.”

Ngo Thanh Huan, CEO of FIDT Investment Consulting and Asset Management, added that most clients today are advised primarily to make purchasing easier rather than to identify their actual needs. Conflicts of interest between financial institutions, advisors, and clients have not been resolved.

“The absence of a harmonising mechanism means interests remain misaligned. Moreover, the market still lacks a hub organisation to connect providers, advisors, and clients in a transparent model that ensures fairness for all parties,” said Huan.

He therefore proposed establishing a financial planning group model based on three key elements: holistic financial planners to shape comprehensive strategies and align investments with client goals, specialised product advisors offering in-depth expertise on select products, and financial institutions providing diverse solutions and tools within a transparent framework.

“To ensure effectiveness, professional standards and licensing systems should be established for advisors, alongside multidisciplinary training to cover multiple fields and provide long-term client support,” he said.

Huan emphasised the need to build client trust through transparency and shift from a product-selling approach to advising in the client’s best interest. A central platform functioning as a hub should connect financial institutions, advisors, and clients within a transparent ecosystem that promotes sustainable benefits.

Advisors, he noted, must move from a sales-driven mindset to a fiduciary standard, placing clients’ interests first. “This requires advisors not only to broaden their knowledge, covering investment, taxation, inheritance, and retirement. They must expand the range of solutions, provide comprehensive long-term support, optimise advisory time, and increase income, rather than relying solely on commissions,” Huan said.

VIR