S&P affirms credit ratings of four Vietnamese banks

By Minh An - Sep 18, 2017 | 07:30 AM GMT+7

TheLEADERStandard & Poor's Global Ratings has reviewed and announced its periodical credit ratings on four Vietnamese banks including the Joint Stock

S&P affirms credit ratings of four Vietnamese banks
Techcombank is upgraded to ‘stable’ outlook. Photo: Techcombank

Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank).

The current ratings of the four banks, compared to the latest ones, remain unchanged for both long-term and short-term issuers.

In particular, S&P affirmed its 'BB-' long-term and 'B' short-term issuer credit ratings on the three banks namely Vietcombank, Vietinbank and Techcombank.

While the agency affirmed the 'B+' long-term and 'B' short-term issuer credit ratings on BIDV.

Regarding the outlook, BIDV and Vietcombank are kept ‘stable’ while Techcombank is upgraded to ‘stable’ and Vietinbank is downgraded from ‘stable’ to ‘negative’.

In April, S&P rated Vietnam 'BB-' long-term and 'B' short-term sovereign credit ratings announced Vietnam's national credit rating BB- / B and ‘stable’ outlook. It can be seen that Vietcombank and Techcombank have reached the ‘national credit rating ceiling’.

A rating agency rarely rates an organization higher than its country in terms of outlook rate.

S&P said that the ‘stable’ outlook of Techcombank "can sustain its above-average profitability over the next 12 months despite competition with an entrenched retail franchise."

Techcombank has been implementing a five-year transition (2016-2020) pursuing a retail – focused strategy. In addition, S&P also considered Techcombank "a balance approach toward profit enhancement and risk - taking."

S&P, meanwhile, revised the outlook of Vietinbank to ‘negative’ to “reflect a one-in-three likelihood that the bank's capitalization may weaken over the next 12 - 18 months.”

Concerning BIDV, which has a lower long-term issuer rating than the rest, was appreciated by the agency as “the bank benefits from one notch of government support given the bank’s size”.

BIDV's ‘stable’ outlook reflects “the bank’s strong franchise, and satisfactory profitability and asset quality, especially via resolution of legacy bad loans, over the next 12 - 18 months”.

BIDV is one of the banks that has gained a great deal of customer confidence thanks to its scale, operating history and government ownership. BIDV's liquidity is supported by a stable deposit foundation and the access to Government’s funds as well as ones supporting development projects from international organizations.

The bank is leading the way in terms of total assets, ranks secondin terms of outstanding loans, customer deposits anddistribution networks. It is estimated that BIDV accounts for about 13% ofcredit market share and 12% market share of deposits