Vietnamese banks expected to get better credit ratings

DNHN - Ratings of Vietnamese banks are expected to be continually improved thanks to Viet Nam’s positive sovereign credit rating.

Customers at a SeABank branch. Moody’s has recently upgraded SeABank’s Baseline Credit Assessment (BCA) from B2 to B1. - Photo nganhangvietnam.vn
Customers at a SeABank branch. Moody’s has recently upgraded SeABank’s Baseline Credit Assessment (BCA) from B2 to B1. - Photo nganhangvietnam.vn.

Moody’s has recently assigned B3 ratings and a stable outlook for Viet Capital Commercial Joint Stock Bank (VietCapitalBank) for the first time, recognising the bank’s prospects through the financial capacity assessment in recent years.

Saigon Hanoi Commercial Joint Stock Bank (SHB)’s credit rating was also upgraded from stable to positive. Specifically, Moody’s upgraded SHB’s long-term deposit and issuer ratings from B2 to B1, and the Baseline Credit Assessment (BCA) from B3 to B2.

At the same time, Moody's has changed the outlook on SHB's ratings to positive from stable, reflecting the rating agency's expectation of a further improvement to the bank's credit profile, driven by improvements to its capital.

The credit rating agency also announced an upgrade to the BCA of Southeast Asia Commercial Joint Stock Bank (SeABank) from B2 to B1, and maintained the bank’s long-term deposit and issuer rating at B1 for the fourth year in a row with positive growth prospects.

The B1 credit rating of HCM City Development Commercial Joint Stock Bank (HDBank) was also upgraded by Moody’s from stable to positive.

According to experts, all the banks, which have been upgraded by Moody’s, have improved their asset quality and financial strength.

In the case of SHB, for example, in 2021, the bank handled all debts of Vinashin and settled all the bonds held by Vietnam Asset Management Company (VAMC) ahead of schedule. Therefore, the credit rating agency has an expectation of a better credit profile, thanks to the bank’s capital improvement.

Meanwhile, SeABank’s non-interest income in 2021 accounted for 26.3 per cent of the total revenue and Return on Assets (ROA), Return on Equity (ROE) and the bad debt ratio were at 1.33 per cent, 16.12 per cent and 1.65 per cent, respectively.

VietCapitalBank has also recorded an average increase of more than 17 per cent per annum in total asset scale in the past five years, of which 2021 alone saw a surge of 25 per cent compared to 2020. The bank cleared off all the bonds at VAMC ahead of schedule in 2020 and is among the banks with no bad debts at VAMC.

Notably, banking expert Nguyen Tri Hieu told Viet Nam News that Viet Nam has gained better ratings from international credit rating agencies thanks to its stable macro economy, maintained GDP growth and favourable business environment.

“Viet Nam’s improved sovereign credit rating therefore will make a very positive and big effect on banks’ credit rating,” Hieu said.

In fact, all three leading credit rating agencies including Moody’s, Standard & Poor’s and Fitch Ratings assessed that Viet Nam has a positive outlook after a period of witnessing the improvement of the country’s macro-economic environment and financial stability.

Fitch Ratings is currently rating Viet Nam at “BB” with positive prospects. Previously, S&P kept Viet Nam’s national credit rating unchanged and upgraded the prospects from stable to positive.

“A positive national credit rating will be the basis for local banks to have the opportunity to increase their ratings in the near future,” Hieu said.

Source: VNS

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