The BCA upgrade was driven by the higher Macro Profile, and by these banks' progress in writing off legacy problem assets.
Specifically, the upgrade of BIDV, Vietcombank, and Vietinbank largely reflected improvements in asset quality. Their funding and liquidity were stable due to their relatively lower reliance on market funds, whereas capital remains a weakness for all three banks.
The ABB, ACB, Military Bank, OCB, TPBank, VIB and Techcombank were also named in the 12-bank list thanks to improvements in their standalone credit strength, particularly progress in writing off legacy problem assets. Moody's expects profitability for these seven banks to improve over the next 12 to 18 months as the burden of credit costs reduces.
The upgrade of VP Bank's BCA took into account its high profitability and strong capitalisation, which offset the high credit risks from its consumer finance portfolio.
The upgrade of HDBank's BCA reflected improvements in the bank's capitalisation and profitability. At the same time, this rating action also took into account the impending merger between HDBank and Petrolimex Group Commercial Joint Stock Bank (PGBank, unrated), a small private sector bank in Vietnam.
The remaining four banks – Maritime Bank, Sacombank, SHB, and Lien Viet – saw their BCAs unchanged, reflecting Moody's expectation that their credit profiles would broadly remain stable over the next 12 – 18 months. The solvency of these banks was modest compared to that of other rated Vietnamese banks, but somewhat balanced by their funding and liquidity.
Moody’s has also taken other positive actions on its rated Vietnamese banks.
Accordingly, it has upgraded long-term local and foreign-currency issuer ratings and long-term local-currency deposit ratings of five banks. Meanwhile, two banks have earned higher ratings on long-term foreign-currency deposit. The remaining banks have their ratings unchanged.
At the same time, Moody's has upgraded the long-term Counterparty Risk Ratings (CRRs) and Counterparty Risk Assessments (CRAs) of eight banks and affirmed the same for the remainders.
Source: VNA