Moody’s rates VIB outlook “positive”

September 22, 2015 | 18:22

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As of September 18, 2015, Moody's has changed the credit rating outlook of Vietnam International Bank’s (VIB) long-term bank deposits and issuer ratings to “positive”.

Earlier in June this year, Moody’s assigned VIB the “stable” outlook in the Counterparty Risk Assessments Report covering nine Vietnamese banks. The change is said to have been driven by improvements in the bank's standalone credit profile.

Specifically, the bank's asset quality metrics have improved, and it has demonstrated a conservative growth appetite underpinned by aprudent capitalisation strategy.

VIB's nonperforming loans ratio has decreased to 3.77 per cent of total gross loans as of June 2015, from 4.14 per cent in December 2014. The proportion of other problematic assets also decreased to 1.6 per cent from 2.2 per cent on-year.

According to Moody’s, these improvements, to some extent, were driven by VIB’s sale of loans to the Vietnam Asset Management Company (VAMC) against special VAMC bonds. Such VAMC transactions have improved the transparency of its asset quality metrics, and forced banks to create 20 per cent provisions per year.

Also, the bank continued to channel a large, 50 per cent part of its pre-provision income into loan loss reserves, scoring further positive remarks in the report.

The bank's credit growth appetite remains conservative. VIB reported an 8 per cent increase in gross loans in the first half of this year, which falls largely in line with the banking system average.

VIB's equity to assets ratio has improved to 10.8 per cent as of June 2015, from 10.5 per cent in December 2014, providing it with the highest capital buffer among the nine Vietnamese banks rated by Moody's.

By By Thanh Xuan

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