Banks boost medium- and long-term lending

Banks boost medium- and long-term lending

Long-term outstanding loans saw the strongest growth of 11.2 per cent to over VNĐ5.1 quadrillion at the end of the second quarter of 2026, while medium-term lending rose by 11 per cent to over VNĐ2.19 quadrillion.

VPBank's long-term loans jumped by 40.5 per cent to nearly VNĐ334.7 trillion. Photo courtesy of the company

Medium- and long-term lending at 27 listed banks has been accelerating, accounting for VNĐ7.29 quadrillion (US$276.1 billion), or 47.3 per cent of total outstanding loans.

The banks' financial statements show that by the end of the second quarter of 2026, their total outstanding loans rose by 8.9 per cent against the end of 2025 to nearly VNĐ15.42 quadrillion.

Though short-term lending still accounted for the largest share with more than VNĐ8 quadrillion (up 6.8 per cent), the growth rate of this lending segment lagged behind the entire banking system’s overall average growth rate (7.73 per cent), causing short-term lending share of total outstanding loans to drop to 52 per cent.

Conversely, loans were clearly shifting toward longer maturities. Specifically, medium-term outstanding loans rose by 11 per cent to over VNĐ2.19 quadrillion, increasing their share to 14.2 per cent, while long-term lending saw the strongest growth of 11.2 per cent to over VNĐ5.1 quadrillion, raising their share to 33.1 per cent.

Medium- and long-term loans thus accounted for 47.3 per cent of total outstanding loans, an increase of 0.9 percentage points compared to the end of 2025. This shift has indicated that banks have been increasing their credit allocation toward longer-term loans.

Medium- and long-term loans accounted for a significant share of up to 70 per cent of total outstanding loans at many banks. At the end of the second quarter, NCB led the group with 72.5 per cent, closely followed by OCB at 72.1 per cent.

Although the proportion of medium- and long-term loans at VPBank remained relatively flat at 60 per cent, long-term loans jumped by 40.5 per cent to nearly VNĐ334.7 trillion, signalling a substantial expansion in long-term capital.

Meanwhile, VIB and Techcombank reported medium- and long-term loan ratios of 59.5 per cent and 59.4 per cent, respectively.

According to experts, the surge of medium- and long-term lending can immediately benefit banks’ net interest margin (NIM) but also places greater pressure on the banks’ funding structure and balance.

Amid high interest rates and limited credit quota allocations, the expansion of medium- and long-term lending can help banks improve the yields on their interest-earning assets, supporting their NIM. This is because, compared to short-term loans, which typically feature rapid re-pricing cycles and face intense competition regarding lending rates, long-term loans generally offer higher yields and sustain profitability over a longer period.

Analysts at Yuanta Securities Vietnam Company said that the share of long-term outstanding loans rose to 33.1 per cent of the total loan portfolio in the second quarter, up from 30.4 per cent in the same period the previous year. This shift occurred as the State Bank of Vietnam (SBV)'s regulatory cap on using short-term funds for medium- and long-term lending was raised from 30 per cent to 40 per cent.

The annualised NIM of 27 listed banks improved by 16 basis points quarter-on-quarter to reach 3.15 per cent in the second quarter, driven by the re-pricing of loans.

"NIM was supported not by a reduction in the cost of funds, but rather through loan re-pricing and the extension of loan maturities," the analysts said.

The banking system has gained additional headroom to increase the proportion of medium- and long-term lending following the SBV’s issuance of Circular 25/2026/TT-NHNN, which raises the maximum ratio of short-term funds used for medium- and long-term lending from 30 per cent to 40 per cent, effective from the beginning of the third quarter of 2026.

The specific exclusion of 18 key infrastructure projects, which are undertaken by three private conglomerates with a total investment cost of over VNĐ750 trillion, from credit growth quotas is an unprecedented move. This also partly explains the necessity of raising the short-term funding utilisation ratio for medium- and long-term lending to 40 per cent.

Nguyễn Thị Phương Lam, head of the Viet Dragon Securities Corporation’s research division, said that banks had recently been compelled to raise more funds to meet the capital demands of long-term projects. Relaxing these metrics was expected to expand lending capacity, particularly for medium- and long-term projects.

Vũ Diệu Hà, an analyst at the KB Securities Vietnam Company, agreed. Hà said that raising the ceiling would allow banks to use a larger proportion of lower-cost short-term funds to finance their medium- and long-term credit portfolios. This would reduce the pressure to raise long-term deposits or issue higher-cost debt instruments, ultimately helping to improve their NIM.

Against the backdrop of the Government ramping up public investment to develop strategic infrastructure and foster investment in production and business activities, demand for medium- and long-term capital was expected to remain robust. 

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