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Banking & Finance

Fitch affirms ratings for five banks

Released at: 12:08, 05/04/2016

Fitch affirms ratings for five banks

Economic improvements and sector stability behind affirmations, Fitch reports.

Fitch Ratings has affirmed the ratings of Agribank, Vietinbank and Vietcombank at “B+” while the Asia Commercial Bank (ACB) and Military Bank (MB) were affirmed at “B”.

The ratings were affirmed because Vietnam’s banking sector is showing initial signs of stabilization, aided by an improving economy.

“We expect funding and liquidity conditions for the sector to remain steady, aided by a relatively stable currency and benign inflation,” Fitch Ratings said. “If sustained, this is likely to alleviate asset-quality pressures on the system. However, we expect banks’ profitability to remain under pressure due to weak net interest margins and high credit costs on more stringent asset classification.”

The long-term Issuer Default Ratings (IDRs) of Agribank, Vietinbank and Vietcombank are driven by Fitch’s expectation that the government would provide extraordinary support as these entities are systemically important. They are among the Top 4 Vietnamese banks in terms of assets and have strong domestic franchises.

The banks’ Support Rating Floors (SRFs) and IDRs are one notch lower than Vietnam’s sovereign rating of BB-/stable.

The stable outlooks on Agribank, Vietinbank and Vietcombank reflect the stable outlook on Vietnam’s sovereign rating, Fitch said.

Source: VNS

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