Moody’s raises rating for 15 Vietnamese banks

Moody's Investors Services revised the outlook for the long-term local and foreign currency deposit and issuer ratings of five banks to positive from negative, four banks to positive from stable and six banks to stable from negative.

Customers at a VPBank branch in Hanoi. Photo: Thanh Hai

The agency also affirmed the long-term local and foreign currency deposit ratings, and where applicable, the issuer and senior unsecured ratings of 15 banks in Vietnam (Ba3 positive).

The rating actions follow Moody's affirmation of Vietnam's Ba3 issuer rating and the change in the outlook to positive from negative on March 18, 2021. 

The affected 15 banks are: (1) An Binh Commercial Joint Stock Bank (ABB), (2) Asia Commercial Bank (ACB), (3) Ho Chi Minh City Development JSC Bank (HDBank), (4) JSC Bank for Foreign Trade of Vietnam (Vietcombank), (5) JSC Bank for Investment & Development of Vietnam (BIDV), (6) Lien Viet Post Joint Stock Commercial Bank (Lien Viet), (7) Military Commercial Joint Stock Bank (MB), (8) Orient Commercial Joint Stock Bank (OCB), (9) Southeast Asia Commercial Joint Stock Bank (SeABank), (10) Tien Phong Commercial Joint Stock Bank (TPBank), (11) Vietnam Bank for Agriculture & Rural Development (Agribank), (12) Vietnam International Bank (VIB), (13) Vietnam JSC Bank for Industry and Trade (Vietinbank), (14) Vietnam Prosperity Jt. Stk. Commercial Bank (VPBank) and (15) Vietnam Technological and Commercial JSB (Techcombank).

“Vietnam's sovereign credit strength is a key input in Moody's assessment of the deposit and issuer ratings of Vietnamese banks, because the country's credit strength affects the government's capacity to provide support to the banks in times of stress,” stated Moody’s.

Moody's revision of the outlook on Vietnam's Ba3 issuer rating to positive from negative signals the government's potentially higher capacity to provide extraordinary support to the banks. As a result, a potential upgrade of the sovereign rating -- as indicated by the positive outlook -- will likely result in upgrades of many Vietnamese banks, via the widening of the government support uplift.

The positive outlook on Vietnam's sovereign rating, therefore, reflects signs of broad-based improvements in Vietnam's institutional and governance strength that may strengthen its credit profile over time, especially as the economy may benefit from the macro changes accelerated by shifts in production location and demand following the coronavirus pandemic.

Vietnam’s Ministry of Finance suggested Moody’s decision in upgrading the country’s outlook by two ranks from negative to positive is “unprecedented” since the Covid-19 outbreak, adding this is a welcome news for Vietnam.