Fitch Ratings has issued the long-term issuer default ratings (IDRs) on five Vietnamese banks.
Under a Fitch Ratings press release late last week, the ratings of Agribank, Vietinbank and Vietcombank were affirmed at ’B+’, while ACB and Military Bank were affirmed at ’B’.The rating agency also said all banks had stable outlooks.According to Fitch, the ratings were affirmed because Vietnam’s banking sector was showing initial signs of stabilisation, aided by an improving economy.
“We expect funding and liquidity conditions for the sector to remain steady, aided by a relatively stable currency and benign inflation,” Fitch Ratings said. “If sustained, this is likely to alleviate asset-quality pressures on the system. However, we expect banks’ profitability to remain under pressure due to weak net interest margins and high credit costs on more stringent asset classification,” it said.
The long-term IDRs of Agribank, Vietinbank and Vietcombank are driven by Fitch’s expectation that the Government would provide extraordinary support as these entities are systemically important. They are among the top four Vietnamese banks in terms of assets and have strong domestic franchises.The banks’ SRFs and IDRs are one notch lower than Vietnam’s sovereign rating (BB-/stable).The stable outlooks on Agribank, Vietinbank and Vietcombank reflected the stable outlook on Vietnam’s sovereign rating, Fitch said.
Source: The Business Times