Moody's has placed six Vietnamese banks on positive outlook, the credit rating agency announced on its website on September 22.
Itupgraded the ratings of the Vietnam International Bank (VIB) by onenotch to B2, while affirming the ratings of five other banks at B3 andchanging their outlooks to positive.
The five banks includeMilitary Bank (MB), Sai Gon Thuong Tin Bank (Sacombank), VietnamTechnological and Commercial Bank (Techcombank), along with AsiaCommercial Bank (ACB) and Vietnam Prosperity Bank (VPBank).
Theagency also affirmed stable outlook for the Vietnam Bank for Industryand Trade (Vietinbank), the Bank for Investment and Development ofVietnam (BIDV) and Sai Gon – Hanoi Bank (SHB).
Moody's said thatthese ratings were primarily driven by the stabilisation in theoperating environment and the expected improvement in underwritingstandards, which, in turn, were due to improved governance and lowerrisk appetite at some banks.
While Vietnam's economic growth hasmoderated, the country has managed to stabilise inflation below 7.5percent, and this achievement has allowed the State Bank of Vietnam toreduce its policy interest rates to promote economic growth. Forexample, the refinancing rate fell to 6.5 percent earlier this year from9 percent at the end of 2012. The lower interest rates are a positivedevelopment for Vietnamese banks because they reduce the debt burden oftheir borrowers.
The macroeconomic stability has also supportedthe liquidity profile of the domestic banks. As deposit growth outpacedloan growth, the banking system's loan-to-deposit ratio improved to 82percent this June, from 87 percent a year ago.
However, Moody'snoted that Vietnamese banks continue to face considerable creditchallenges that will take time to resolve. The obstacles include problemassets over and above reported non-performing loans and poorloss-absorption capacity due to loan-loss provisions and weakprofitability.-VNA
Itupgraded the ratings of the Vietnam International Bank (VIB) by onenotch to B2, while affirming the ratings of five other banks at B3 andchanging their outlooks to positive.
The five banks includeMilitary Bank (MB), Sai Gon Thuong Tin Bank (Sacombank), VietnamTechnological and Commercial Bank (Techcombank), along with AsiaCommercial Bank (ACB) and Vietnam Prosperity Bank (VPBank).
Theagency also affirmed stable outlook for the Vietnam Bank for Industryand Trade (Vietinbank), the Bank for Investment and Development ofVietnam (BIDV) and Sai Gon – Hanoi Bank (SHB).
Moody's said thatthese ratings were primarily driven by the stabilisation in theoperating environment and the expected improvement in underwritingstandards, which, in turn, were due to improved governance and lowerrisk appetite at some banks.
While Vietnam's economic growth hasmoderated, the country has managed to stabilise inflation below 7.5percent, and this achievement has allowed the State Bank of Vietnam toreduce its policy interest rates to promote economic growth. Forexample, the refinancing rate fell to 6.5 percent earlier this year from9 percent at the end of 2012. The lower interest rates are a positivedevelopment for Vietnamese banks because they reduce the debt burden oftheir borrowers.
The macroeconomic stability has also supportedthe liquidity profile of the domestic banks. As deposit growth outpacedloan growth, the banking system's loan-to-deposit ratio improved to 82percent this June, from 87 percent a year ago.
However, Moody'snoted that Vietnamese banks continue to face considerable creditchallenges that will take time to resolve. The obstacles include problemassets over and above reported non-performing loans and poorloss-absorption capacity due to loan-loss provisions and weakprofitability.-VNA
