Small banks find it increasingly difficult to compete

As the Vietnamese financial market continues to expand, many new services may be licensed, causing the ecosystem of large banks to expand. Meanwhile, small banks, which are already struggling to compete, will find it even more difficult.

The investment sector is expanding, and banks are increasingly differentiated.

In the context that the State Bank of Vietnam (SBV) is researching the establishment of a gold exchange, Techcombank recently announced the recruitment of a Senior Gold Trader position. Previously, the bank's leaders also said that they were preparing to look for partners, personnel, warehouses, facilities, etc. to participate in the gold market.

According to Techcombank's leaders, this bank and Techcombank Securities Company (TCBS) have enough capacity to coordinate the implementation and operation of a centralized gold trading floor thanks to extensive experience in building and operating trading centers; strong technology and financial-banking infrastructure; capacity to manage status and coordinate commodity products...

Also wanting to join the gold game,ACB also said that this bank has experience in establishing the ACB Gold Trading Center in the past, and was also a member of the Dubai Gold & Commodities Exchange in 2009. Accordingly, ACB recommends that, in addition to the physical gold trading floor, there should be more investment directions through the form of ETF fund certificates (Gold EFT) to attract and convert physical gold into money.

According to the roadmap of the State Bank of Vietnam, the pilot establishment of a gold exchange in Vietnam will be divided into 3 phases. Accordingly, phase 1 will form a physical gold trading floor, the next phase will have additional derivative products.

However, according to Mr. Bui Hoang Hai, Vice Chairman of the State Securities Commission, current legislation allows Vietnam to immediately deploy two products: gold derivatives and gold exchange-traded fund (ETF). Gold derivatives help businesses hedge against price fluctuations and meet legitimate speculative needs, while gold ETFs serve people's need for safe storage.

Currently, there are 8 banks qualified to be licensed to produce gold bars: Vietcombank, VPBank, BIDV, MB, VietinBank, Agribank , Techcombank and ACB. The group of state-owned joint stock commercial banks (BIDV, Vietcombank, VietinBank, Agribank) has not yet commented on their strategy to participate in the gold market, but all 4 banks have many recommendations related to gold import, production and trading activities.

BIDV also recommended that the State Bank issue a document guiding the purchase and sale of gold in foreign accounts to balance the status.

In addition to the gold playground, banks are also actively participating in the race to establish crypto-asset exchanges. By the end of September 2025, a series of banks appeared in crypto-asset exchange joint stock companies, including LPBank (LPEX), HDBank (HDEX), VPBank (CAEX), Techcombank (TCEX), MB (signed a memorandum of understanding on technical cooperation with Dunamu - the operator of Upbit, the largest cryptocurrency platform in Korea).

If gold and crypto-asset exchanges are established, many banks will see a sharp increase in revenue from these two asset investment channels. In other words, banks that win tickets to participate in the gold and crypto-asset playground will have advantages in diversifying the ecosystem, attracting and retaining customers, increasing capital, as well as increasing revenue and profit.

Small banks find it increasingly difficult to compete

Not only do they face strong competition in the service sector when the ecosystem is difficult to "compete" with large banks, even in the traditional areas of lending and mobilization, small banks are increasingly struggling.

According to FiinRatings, currently, large banks benefit from more stable deposit sources and good access to the bond market, while also benefiting from reduced mandatory provisions, helping to increase liquidity and reduce mobilization costs.

Meanwhile, smaller commercial banks face fierce competition for funding and higher wholesale funding costs, forcing them to extend funding maturities and closely manage their asset-liability balances to comply with the 30% ceiling on short-term capital for medium- and long-term lending, while maintaining reasonable profit margins.

FiinRatings statistics show that the credit ratings of banks in the first half of this year show an increasingly clear differentiation in the credit quality of banks. Banks with strong capital capacity continue to consolidate their position, while banks with limited capital capacity and weak mobilization capacity are under pressure to reduce credit quality.

It is forecasted that in the 2025-2026 period, the differentiation will become more evident if the macro conditions worsen. Small banks with low core Tier 1 capital, high bad debts, weak coverage ratios and high dependence on interbank funding will face the risk of weakening asset quality and higher provisioning needs. Currently, the bad debt coverage ratio of the small bank group is very low, reflecting a weaker buffer against credit shocks in the private sector.

From the end of 2025, Basel III capital requirements and the removal of credit limits will create an increasingly clear differentiation between banks. Specifically, banks with large scale and capital capacity will expand market share, while small banks need to regulate growth to balance capital, profits and asset quality.

Meanwhile, VIS Rating analysts also warned of strong differentiation in the banking sector. Accordingly, many small banks will be under great pressure due to high credit costs, causing profits to be eroded and competitiveness to decline.

“Liquidity remains a prominent challenge, especially for small banks. While large banks maintain balance by issuing long-term bonds and accessing foreign capital, the group of small banks with limited liquid assets, heavily dependent on short-term sources, is under great pressure from mobilization costs. If there are unexpected fluctuations in deposit flows, the liquidity risk of this group will increase significantly,” analysts warned.

Experts warn that the trend of differentiation in banking profits will become increasingly stronger. Small banks, if they do not restructure their mobilization model and improve risk management, will face increasing pressure.

Source: https://baodautu.vn/ngan-hang-nho-ngay-cang-kho-canh-tranh-d415534.html