Moody’s Investors Service on Tuesday upgraded the ratings of 14 Vietnamese banks, driven by its upgrade of Vietnam’s sovereign rating to Ba3 from B1 late last week.
Under the latest rating actions on Vietnam’s banking industry, Moody’s upgraded the long-term local and foreign-currency deposit and issuer ratings of Vietcombank, BIDV and VietinBank.
Moody’s also upgraded the long-term counterparty risk ratings (CRR) and counterparty risk assessments (CRAs) of VietinBank and BIDV, and affirmed those of Vietcombank.
Besides the large-sized banks, Moody’s also upgraded the long-term foreign-currency deposit ratings of ACB, Military Bank and Techcombank. All other ratings of these three banks were affirmed.
At the same time, Moody’s also upgraded the long-term local and foreign-currency bank deposit and issuer ratings of five banks named An Binh Bank, LienVietPostBank, TPBank, VIB and VP Bank. All other ratings of these five banks were affirmed.
The long-term CRR and CRA of SHB, HDBank and OCB were also upgraded. All other ratings of these three banks were affirmed.
Moody’s has also changed the outlook for the local currency deposit and local and foreign-currency issuer ratings of eight banks — Vietcombank, BIDV, VietinBank, An Binh Bank, LienVietPostBank, TPBank, VIB and VP Bank — from positive to stable.
According to Moody’s, the baseline credit assessments (BCAs) and adjusted BCAs assigned to the 14 banks are unaffected by Tuesday’s rating actions.
The credit ratings, assessments and outlooks assigned to the other two Moody’s-rated banks in Vietnam are unaffected by the upgrade and change in outlook of Viet Nam’s sovereign rating. The two unaffected banks are Sacombank and Maritime Bank.
Vietnam’s sovereign credit strength is a key input in Moody’s deposit and issuer ratings for Vietnamese banks, because the country’s credit strength affects Moody’s assessment of the Government’s capacity to provide support to the banks in times of stress.
The upgrade in Vietnam’s sovereign rating to Ba3 from B1 is underpinned by strong trends in growth, underway for the past decade, that are well-supported by a robust external sector and favourable consumption trends. This in turn has supported a stabilisation in debt levels. The upgrade also reflects improvements in the health of the banking sector, albeit from relatively weak levels.
Following the upgrade of Vietnam’s sovereign rating, the foreign currency deposit ceiling is raised to B1 from B2, driving the upgrade of the long-term foreign-currency deposit rating of 11 banks.
Moody’s said that the baseline credit assessments (BCAs) of the 14 Vietnamese banks could also be upgraded if the macroeconomic and operating conditions for banks in Vietnam improve, leading to a higher macro profile for the country.