Fitch Ratings has issued a warning about the growing risks facing Vietnam’s banking sector. The agency raised concerns about two critical weaknesses, highlighting the rapid increase in lending and noting that credit growth is far outpacing GDP. This poses a risk to the country’s financial stability, especially if the government ends its credit quota system next year.
Fitch Ratings emphasized that the acceleration of credit expansion in Vietnam is raising risks for the financial system. As credit grows rapidly, it increases debt burdens, which are already high. Willie Tanoto, Senior Director of Fitch’s Asia-Pacific Financial Institutions division, noted, “Credit growth is now at a very high level, and it will add to the already substantial debt load.”
Despite Fitch’s neutral-to-positive outlook on Vietnam’s banking sector, Tanoto said his concerns have grown over the past 6-12 months, compared to the previous five years.
Lending drives GDP growth of 8-10%
Previously, Prime Minister Pham Minh Chinh instructed the State Bank of Vietnam to create a roadmap to phase out the credit quota system starting in 2026. This is part of the strategy to achieve 8% GDP growth this year and a 10% average growth over the next five years.
In the first half of 2025, credit in the system rose by 18.1% year-on-year, according to the World Bank. The State Bank of Vietnam forecasts a 19-20% increase in credit for 2025, and Fitch predicts growth of 18% in 2026, even if the credit quota system remains unchanged.
This surge in credit has been a key driver for Vietnam’s rapid economic growth, with GDP growth of 8.2% in the third quarter of 2025.