Date Received: 09-01-2026 / Date Accepted: 26-04-2026 / Date Published: 29-04-2026
Non-performing loans (NPLs) serve as a key indicator of a bank’s financial strength, risk management, and operational efficiency. Effective management of NPLs is essential for maintaining long-term sustainability, ensuring regulatory compliance, and preserving customer trust. This study examined the factors influencing NPLs, measured by the NPLs ratio (NPLR), using data from 30 commercial banks in Vietnam over the period of 2017–2023. Descriptive statistics were employed to assess the overall performance of the banks, while the fixed effects model (FEM) was used to identify the key determinants of the NPLs. The findings revealed that factors such as credit growth, customer deposits, and bank assets saw substantial increases, although growth was significantly impacted by the Covid-19 pandemic. It was observed that a higher return on equity (ROE) and operating costs were associated with lower NPLs, while rising NPLs from the previous year, a larger bank size, and higher loan-to-asset ratios contributed to higher NPLs. These results provide important insights for banks on how to manage NPLs effectively. It is recommended that banks conduct thorough credit assessments, better manage operation costs, maintain strong profitability, and carefully manage existing loan portfolios to ensure the NPL ratio is within the permissible threshold.
