Fitch confirms VN bank ratings

The long-term issuer default ratings (IDR) on Agribank and Vietinbank were affirmed at ‘B+' with stable outlooks, while the IDRs on ACB and Military Bank were affirmed at ‘B'. Photo infonet

The long-term issuer default ratings (IDR) on Agribank and Vietinbank were affirmed at ‘B+' with stable outlooks, while the IDRs on ACB and Military Bank were affirmed at ‘B'.

According to Fitch, the ratings of Agribank and Vietinbank, which are the two largest banks by asset size in Viet Nam with strong domestic franchises, are driven by the agency's expectation that the Government would provide extraordinary support as both entities are important for facilitating certain types of policy functions that affect the domestic economy.

The banks' ratings are one notch down from Viet Nam's sovereign rating (BB-/Stable) as the relatively large size of the banking industry compared with the country's GDP and the government's finances may limit the timeliness of support.

Fitch said it did not expect Vietinbank's recently announced plan to acquire Petrolimex Group Bank to affect the bank's viability rating due to the very small size of the latter (3.6 per cent of Vietinbank's total assets).

On ACB and Military Bank, Fitch said the IDRs of the two banks were driven by their viability ratings and had remained constrained by lingering loan quality risks.

ACB's ratings reflect its relatively stable credit profile and what Fitch believes to be better risk management on the back of assistance from its strategic shareholder, Standard Chartered Bank.

In addition, ACB's loan quality is likely to remain stable and less concentrated than its peers due to its focus on private small- and medium-sized enterprises and individuals.

Meanwhile, Fitch expects that Military Bank, with ratings that reflect its franchise as one of the largest private commercial banks in Viet Nam, will continue to demonstrate stronger profitability relative to its peers, which in turn will support its capitalisation.