State-owned banks' rating upgraded

Fitch Ratings has upgraded the ratings of Vietnam's four leading state-owned commercial banks.
The ratings agency cited reasons for the upgrade as “better underlying profitability due to higher margins resulting from a higher interest rate and a shift towards more private-sector lending,” the report said.

The ratings for Bank for Investment and Development of Vietnam (BIDV) , Industrial and Commercial Bank (Incombank) of Vietnam and Vietnam Bank for Agriculture and Rural Development (Agribank) have been raised to ‘D/E’ from ‘E’, while the rating for the Bank for Foreign Trade of Vietnam's (Vietcombank) has been raised to ‘D’ from ‘D/E’.

The support ratings of the “big four” banks, which together account for about 75% of system-wide assets in Vietnam, remain unchanged at ‘4’.
The agency said though the Vietnamese government is willing to support the banks, its ability to do so could be constrained due to its own limited financial capacity as per its sovereign rating of 'BB-'.

In the case of all the banks' ratings, further upside potential could be limited, and indeed downside pressure could arise, if there was any deterioration in Vietnam's economy, Fitch said.

Source: Thanh Nien