Most Vietnamese banks are still struggling to comply with the banking authority’s regulations related to digital transformation, particularly those concerning the management of third-party risks.

After the parliament disapproved a plan to use state funds to raise registered capital, state-owned banks will have to look for foreign investment to increase capital.

It is a rare combination where Vietnamese banks are growing fast and are quite profitable, said an expert at JP Morgan.

The negative outlook reflects some ongoing risk of payment delays on some of the government's indirect debt obligations.

Foreign banks have decided to boost consumer finance loans as the business segment is forecast to maintain double digit growth this year.