Illustrative image (Photo: Techcombank) Hanoi (VNS/VNA) - Banksin Vietnam posted solid profit growth and asset quality improvements in 2019,benefiting from the country's robust macro-economic environment, Moody'sInvestors Service said.
Under a new report released on March 2, the internationalrating agency said solvency improvements of the banks have peaked.
The agency predicted that the banks’ capitalisation and assetquality would stay at current levels in 2020. Improvements in profitabilitywill slow overall, as competition drives up funding costs.
"For 2020, capitalisation will broadly stabilise, asassets grow at a similar pace to the rate of internal capital generation,"says Rebaca Tan, a Moody's Assistant Vice President and Analyst. "As forasset quality, any improvements will be limited."
Moody's points out that downside risks to asset quality canarise from disruptions caused by the coronavirus outbreak, which, if prolonged,will lead to increases in non-performing loans in the manufacturing, trade andother sectors, given Vietnam's large exposure and close ties to global supplychains.
"As for profitability, the gap will widen between banksthat have adopted the new Basel II capital standards and those that havenot," adds Tan.
In particular, Moody's expects that in 2020, the country'scentral bank will grant higher limits for loan growth to banks that haveadopted Basel II and maintain good financials. The higher growth limits willtranslate into larger gains in earnings and widen the profitability gap betweenbanks that have and have not adopted the new capital standard.
According to Moody's, its analysis is based on the latestreleased results of 16 Vietnamese banks, which together accounted for 61 percentof total banking system assets at 30 June 2019./.
Under a new report released on March 2, the internationalrating agency said solvency improvements of the banks have peaked.
The agency predicted that the banks’ capitalisation and assetquality would stay at current levels in 2020. Improvements in profitabilitywill slow overall, as competition drives up funding costs.
"For 2020, capitalisation will broadly stabilise, asassets grow at a similar pace to the rate of internal capital generation,"says Rebaca Tan, a Moody's Assistant Vice President and Analyst. "As forasset quality, any improvements will be limited."
Moody's points out that downside risks to asset quality canarise from disruptions caused by the coronavirus outbreak, which, if prolonged,will lead to increases in non-performing loans in the manufacturing, trade andother sectors, given Vietnam's large exposure and close ties to global supplychains.
"As for profitability, the gap will widen between banksthat have adopted the new Basel II capital standards and those that havenot," adds Tan.
In particular, Moody's expects that in 2020, the country'scentral bank will grant higher limits for loan growth to banks that haveadopted Basel II and maintain good financials. The higher growth limits willtranslate into larger gains in earnings and widen the profitability gap betweenbanks that have and have not adopted the new capital standard.
According to Moody's, its analysis is based on the latestreleased results of 16 Vietnamese banks, which together accounted for 61 percentof total banking system assets at 30 June 2019./.
VNA
