Higher borrowing costs squeeze corporate earnings

As of March 31, the total asset value of listed firms on Vietnam’s stock market exceeded $1.2 quadrillion for the first time.

The financial picture of many listed firms in the first quarter of 2026 showed a trend of asset expansion alongside rising debt and equity capital.

According to financial data from listed companies as of March 31, both liabilities and total assets have increased steadily in recent years.

Rising capital costs are placing substantial pressure on corporate profits in 2026

Specifically, liabilities of surveyed listed firms rose from more than $816 billion at the end of Q1/2025 to nearly $1.016 trillion by the end of Q1/2026, while total assets increased from approximately $1 trillion to more than $1.2 trillion.

In Q1, the number of companies with higher interest expense-to-revenue ratios compared with the same period last year exceeded the number of companies reporting declines.

Among large-cap listed firms, interest expenses remained exceptionally high. Vingroup continued to record the highest interest expenses among listed companies at approximately $301 million, followed by Vinhomes at around $102 million, Hoa Phat at roughly $53 million, and Masan Group at more than $48 million.

Interest cost pressure has also become increasingly evident among securities companies, a sector that has rapidly expanded its asset scale over the past two years.

Amid intensifying competition, many securities firms have accelerated margin lending, technology investment, and service ecosystem expansion, leading to greater capital mobilisation needs.

The upward trend in interest expenses appeared across most securities companies. At Tien Phong Securities (TPS), for example, the ratio of interest expense to net operating revenue increased from 34.2 per cent in Q1/2025 to nearly 47 per cent in Q1/2026. At DSC Securities, the ratio rose from 21.5 per cent at the end of Q1/2025 to 33.6 per cent by the end of Q1/2026.

Pressure from rising capital costs is not only reflected in the financial statements of listed companies. According to a survey conducted by the National Statistics Office on factors affecting production and business activities in Q1, rising lending rates became a significant challenge for 32 per cent of surveyed businesses, marking a sharp increase from the previous quarter.

Higher capital costs are creating multidimensional impacts on corporate operations in 2026. The increase in interest rates has significantly intensified financial pressure.

Beyond increasing borrowing costs, higher capital costs are also affecting investment expansion capacity, project implementation speed, and corporate cash flow resilience, particularly in highly leveraged sectors such as real estate, securities, steel, and infrastructure.

According to credit rating agency S&I Ratings, competitive pressure is forcing securities companies to accelerate investment in technology, data infrastructure, AI, and risk management.

At the same time, compliance costs are also rising to meet stricter requirements on financial safety and system transparency.

In addition, the capital structure of the securities industry remains heavily skewed towards short-term debt, which currently accounts for approximately 96 per cent of total liabilities.

The ratio of liquid assets to short-term debt stands at only around 43 per cent and has been declining over the years. Funding costs for securities companies are also facing upward pressure.

In the real estate sector, S&I Ratings noted that the 2026 business plans of listed companies reveal clear divergence. One of the main reasons stems from pressure from rising construction costs and higher interest rates.

According to market observations, preferential lending rates in Q1 increased to 8-10 per cent, per year during the initial fixed-rate period before floating to 11-14 per cent per year, significantly higher than the commonly seen 6-8 per cent range in 2025.

Pressure from rising borrowing costs on homebuyers has forced many developers to introduce financial support policies to maintain liquidity and stimulate market demand.

Experts believe that 2026-2027 will more likely represent a cycle of increasing supply rather than the beginning of another strong real estate price surge. This means companies will face fiercer competition in selling prices, payment policies, and financial capability.

In an environment where interest rates no longer remain at prolonged low levels as in previous years, the challenge of controlling financial leverage and optimising capital efficiency will become increasingly crucial for businesses.

Maintaining stable cash flow, a safe debt structure, and efficient capital turnover will provide companies with a significant advantage during a period of rising capital costs.

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