S&P Warns Vietnam Credit-Quota Phaseout and Basel III Could Widen Bank Divide

Vietnam credit-quota reform could reshape competition in the banking sector as the country pilots the removal of long-standing growth limits from 2026 and rolls out Basel III-style capital rules, S&P Global Ratings said.

S&P said Vietnam credit-quota reform would shift the system away from administrative controls toward more market-based discipline, allowing well-capitalised banks to expand lending based on capacity rather than assigned quotas.

However, it called the move a double-edged sword given Vietnam’s credit-to-GDP ratio is above 140% and past episodes of weak governance, including problems at Saigon Joint Stock Commercial Bank, which could widen the gap between stronger and weaker lenders.