Q1 earnings picture mixed as cost pressures persist

According to latest forecast by Vietcombank Securities, business results for Q1/2026 are expected to diverge significantly across sectors, amid ongoing pressure from high funding costs and a highly volatile macroeconomic environment.

In the banking sector, profit growth is projected to slow as net interest margins (NIM) continue to face pressure from elevated funding costs, while credit growth remains constrained – particularly in real estate lending, which had been a key driver for many banks in previous years.

Private banks are therefore likely to post weaker growth, whereas state-owned banks are expected to perform better thanks to their lower cost of funds and a relatively low profit base in 2025.

Corporate profits in Q1, 2026 are forecast to diverge across sectors

In the securities sector, performance is forecast to vary widely among firms.

Leading players, with strong margin lending operations, are expected to see improved profits, supported by rising market liquidity and expanded margin loan balances following capital increases in 2025.

In addition, well-structured investment portfolios aligned with covered warrant issuance, along with significant holdings of bonds and certificates of deposit, are likely to provide stable income streams.

In contrast, smaller and mid-sized firms with large equity portfolios may face negative impacts from volatility in the VN-Index, particularly during sharp corrections, weighing on proprietary trading performance.

In the retail and consumer sector, Q1 results are expected to continue growing, supported by a low base in the same period last year.

However, inflationary pressures and rising input costs may dampen demand for non-essential goods. On a positive note, new regulations on e-commerce management and product traceability are helping restructure the market, encouraging a shift in demand away from informal or unverified goods towards formal retail systems.

Combined with support from consumer finance solutions, this trend could enable leading companies to expand market share and maintain profit margins despite pressure on real household incomes.

In the residential real estate sector, higher interest rates continue to weigh on developers’ profit margins and affect homebuyers’ sentiment and affordability.

Nevertheless, gradual improvements in the legal framework are expected to support supply recovery.

After a period of rapid increases, housing prices in urban centres are showing signs of cooling due to declining speculative demand, while a growing shift towards suburban areas is becoming more evident, driven by improvements in transport infrastructure.

For industrial real estate and rubber companies, revenues are projected to remain positive, supported by sustained leasing activities from late 2025 into early 2026. However, profit performance may diverge across firms.

Companies with large cash deposits stand to benefit from rising deposit interest rates. The rubber segment, in particular, is viewed more favourably, as export prices rose sharply in Q1 and several land compensation projects made notable legal progress.

Meanwhile, the oil and gas sector is expected to post positive results in Q1, 2026, albeit with divergence across segments.

Upstream companies are benefiting from increased exploration and production activities, while selling prices for oil and gas products are improving in line with global oil price trends.

Tensions in the Strait of Hormuz are seen as a factor heightening supply disruption risks, thereby supporting oil prices.

In the power sector, business performance is also expected to diverge. Overall industry revenue may increase on the back of higher electricity output. However, post-tax profits will vary across power generation types.

Hydropower and renewable energy are expected to benefit from higher output, while thermal power – coal, gas, and liquefied natural gas – may see profit margins squeezed by rising input costs despite revenue growth.

The steel sector is assessed as neutral for Q1, with domestic selling prices trending upward. Construction steel has recorded stronger increases compared to coated steel, steel pipes, and hot-rolled coil.

However, the market faces external pressures, particularly geopolitical tensions in the Middle East, which have driven up transportation costs and could alter global steel trade flows.

Excess supply from China also continues to weigh on Vietnam’s export competitiveness. In this context, divergence among companies is expected to widen, with upstream firms holding an advantage, while downstream players face greater challenges.

The construction sector in 2026 is expected to see an improvement in project pipelines, supported by increased housing supply and accelerated infrastructure development. Potential shortages of construction materials, however, could put pressure on profit margins across the industry.

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