The impact of monetary policy on bank performance and risk is driven by bank individual characteristics and the COVID-19 pandemic, and the joint effect of bank individual factors and the coronavirus has been under-researched so far. To fill this void, this research applies the dynamic two-step system generalized method of moments (S-GMM) estimator to a sample of representative commercial banks on a quarterly basis for a small open emerging market such as Vietnam. We find that monetary policy expansion stimulates both banks’ performance and risk in a COVID-19 pandemic. Interestingly, the effectiveness of monetary policy expansion on banks’ operating outcomes is dependent on the interaction between the heterogeneity of the bank’s balance sheet items and the COVID-19 outbreak. More specifically, the performance-decreasing effects of monetary policy loosening are more pronounced in banks with small size, high liquidity, low capitalization, and high credit risk in the shadow of the COVID-19 crisis. Meanwhile, the risk-increasing impacts of monetary policy easing are conspicuous in well liquid, less capitalized, and high credit risk banks in an uncertain time of the COVID-19 crisis. These results are robust to alternative proxies of monetary policy instruments.