Fitch Ratings this week affirmed the ratings for four major Vietnamese banks.
Thelong-term issuer default ratings (IDR) on Agribank and Vietinbank wereaffirmed at ‘B+' with stable outlooks, while the IDRs on ACB andMilitary Bank were affirmed at ‘B'.
According to Fitch, theratings of Agribank and Vietinbank, which are the two largest banks byasset size in Vietnam with strong domestic franchises, are driven by theagency's expectation that the Government would provide extraordinarysupport as both entities are important for facilitating certain types ofpolicy functions that affect the domestic economy.
The banks'ratings are one notch down from Vietnam's sovereign rating (BB-/Stable)as the relatively large size of the banking industry compared with thecountry's GDP and the government's finances may limit the timeliness ofsupport.
Fitch said it did not expect Vietinbank's recentlyannounced plan to acquire Petrolimex Group Bank to affect the bank'sviability rating due to the very small size of the latter (3.6 percentof Vietinbank's total assets).
On ACB and Military Bank, Fitchsaid the IDRs of the two banks were driven by their viability ratingsand had remained constrained by lingering loan quality risks.
ACB'sratings reflect its relatively stable credit profile and what Fitchbelieves to be better risk management on the back of assistance from itsstrategic shareholder, Standard Chartered Bank.
In addition,ACB's loan quality is likely to remain stable and less concentrated thanits peers due to its focus on private small- and medium-sizedenterprises and individuals.
Meanwhile, Fitch expects thatMilitary Bank, with ratings that reflect its franchise as one of thelargest private commercial banks in Vietnam, will continue todemonstrate stronger profitability relative to its peers, which in turnwill support its capitalisation.-VNA
Thelong-term issuer default ratings (IDR) on Agribank and Vietinbank wereaffirmed at ‘B+' with stable outlooks, while the IDRs on ACB andMilitary Bank were affirmed at ‘B'.
According to Fitch, theratings of Agribank and Vietinbank, which are the two largest banks byasset size in Vietnam with strong domestic franchises, are driven by theagency's expectation that the Government would provide extraordinarysupport as both entities are important for facilitating certain types ofpolicy functions that affect the domestic economy.
The banks'ratings are one notch down from Vietnam's sovereign rating (BB-/Stable)as the relatively large size of the banking industry compared with thecountry's GDP and the government's finances may limit the timeliness ofsupport.
Fitch said it did not expect Vietinbank's recentlyannounced plan to acquire Petrolimex Group Bank to affect the bank'sviability rating due to the very small size of the latter (3.6 percentof Vietinbank's total assets).
On ACB and Military Bank, Fitchsaid the IDRs of the two banks were driven by their viability ratingsand had remained constrained by lingering loan quality risks.
ACB'sratings reflect its relatively stable credit profile and what Fitchbelieves to be better risk management on the back of assistance from itsstrategic shareholder, Standard Chartered Bank.
In addition,ACB's loan quality is likely to remain stable and less concentrated thanits peers due to its focus on private small- and medium-sizedenterprises and individuals.
Meanwhile, Fitch expects thatMilitary Bank, with ratings that reflect its franchise as one of thelargest private commercial banks in Vietnam, will continue todemonstrate stronger profitability relative to its peers, which in turnwill support its capitalisation.-VNA
