Q2 profit expectations rise as real estate and banks lead market recovery

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Profit growth diverges across sectors

The growth in corporate earnings reflects a positive start for listed companies, in line with the strong expansion of the economy in the first quarter. By the end of Q1/2026, total after-tax profit of 803 companies across all three exchanges that had released financial statements rose 38.2% year-on-year, mainly driven by a sharp increase in the non-financial sector (69.8% YoY). Real estate stocks (55.5% YoY), with VHM surging 866%, accounted for 84% of the sector’s growth, while the financial sector (banking, insurance, financial services) grew 14.4% due to slower momentum among banks.

According to data from Saigon - Hanoi Securities Joint Stock Company (SHS), mid-cap stocks represented by the VNMid Index recorded an exceptional profit increase of 82.6%, while the VN30 posted its highest growth in eight quarters. Small-cap stocks improved compared to Q4/2025 but remained at relatively low levels.

Pre-tax profit in the banking sector (27 listed banks) rose 14.2% YoY, slightly below the 14.5% growth seen in Q1/2025, accounting for 38.1% of total market profit. State-owned banks posted profit growth of 25.6% and increased their share to 33.4% of total banking sector profit, despite VCB increasing credit risk provisions by 231%. Among large private banks, VPB and HDB recorded the strongest credit growth, exceeding 10% and more than triple the sector average.

Total pre-tax profit in the financial services sector (79 companies) rose 21.5% YoY. The top 10 firms by market share accounted for 75% of total sector profit. By the end of Q1, total margin lending outstanding across the market reached approximately VND 412.5 trillion, up 2.9% from the end of 2025, with TCI recording the largest margin loan balance at VND 44.147 trillion.

The residential and commercial real estate sector saw revenue growth of 11.3% in Q1, with the Vingroup ecosystem (VHM, VRE, VEF) accounting for 81.5% of the sector. Net profit surged 55.5% YoY thanks to extraordinary gains from several firms such as VHM (866%) and NVL (280%). Excluding VIC and VPL, the Vingroup ecosystem still contributed 89.5% of total sector profit.

Viet Dragon Securities Corporation (VDSC) noted that the market in the first quarter reflected a mixed picture: earnings continued to grow, but capital flows remained cautious and highly selective. Corporate profits still supported valuations, though liquidity had yet to improve sufficiently, foreign investors continued net selling, and geopolitical risks alongside inflationary pressures prevented the recovery from becoming truly sustainable.

Which sectors are expected to perform in Q2?

The market has yet to fully reprice the strong earnings base delivered in Q1/2026. Index movements remain largely driven by a handful of individual stocks with specific narratives, while most equities have already deeply priced in the risks of slowing growth stemming from prolonged energy shocks and persistently high interest rates.

This suggests the market is not lacking earnings growth, but rather confidence in the sustainability of the profit cycle. Risk premiums therefore remain elevated after the Q1 earnings season, preventing valuations from expanding in line with reported profits. Over the next three months, market expectations will likely depend heavily on developments in the Middle East.

“We believe tensions are likely approaching a cooling point in the medium term, although the conflict cannot yet be considered over. Legal constraints on the executive power of the U.S. President are tightening, while Iran’s ability to control the Strait of Hormuz is becoming clearer, forcing all sides to reconsider the costs of prolonging the conflict. As such, the market is justified in pricing oil supply risks as urgent in the short term but unlikely to persist indefinitely,” said Nguyễn Thị Phương Lam, Head of Research at Viet Dragon Securities Corporation.

Domestically, VDSC noted that Vietnam’s GDP grew 7.83% in Q1/2026, the highest first-quarter growth since 2011, though still below the Government’s 9.1% scenario. The National Assembly’s decision to maintain the 2026 GDP growth target at above 10% indicates a continued aggressive policy stance, meaning the remaining quarters would need to expand by around 10–11% each.

According to analysts, policy priorities will likely focus on boosting total social investment, stimulating consumption, and unblocking capital flows. Despite inflationary pressures from energy prices, the Government still has fiscal room to keep CPI within the 4.5%–5% target range, while exchange-rate flexibility could still support credit growth, exports, and economic expansion.

However, in the short term, a weakening trade balance could narrow room for exchange-rate stability. High interest rates may also slow credit growth or weaken loan quality. On the positive side, external pressures may gradually normalize if raw-material stockpiling eases and energy flows recover, thereby improving the trade balance.

Regarding earnings, VDSC expects total market profit in Q2/2026 to rise around 18% YoY, driven mainly by real estate and banking. Real estate is projected to contribute 9.1 percentage points, led by the Vingroup ecosystem thanks to a low comparison base, rapid progress at mega-projects, and strong sales momentum. Banking is expected to contribute 4.8 percentage points, with credit growth forecast at around 16% YoY despite ongoing pressure on net interest margins. The non-financial sector is expected to contribute 3.6 percentage points, benefiting from higher commodity and service prices, though margins may gradually normalize as high-cost inventory is reflected.

VDSC also revised down its target P/E range for the VN-Index over the next three to four months to 12.2x–14.0x, reflecting the view that interest rates are stabilizing at a “new higher level” and are unlikely to ease quickly. With market EPS expected to rise from VND 133 to VND 136–138, the VN-Index is projected to fluctuate between 1,623 and 2,317 points, equivalent to a range of -10.7% to 24.9% from the April 29, 2026 closing level.

Meanwhile, SHS believes the sectors likely to perform well in the short term during May 2026 include securities, residential real estate, banking, and steel. Investors may consider accumulating and pursuing value investment opportunities in these areas. SHS also added several new stocks to its May portfolio, including VPB, MSB, VCB, and DCM, while continuing to maintain positions in fundamentally strong companies such as HPG, MBB, REE, MWG, SSI, and VIX.