S&P Global Ratings affirmed 's ratings and removed them from CreditWatch, with implications.
The rating agency said July 18 that it affirmed the bank'sB+ long-term and B short-term issuer credit ratings. The outlook on thelong-term rating is negative.
In addition, the bank's short-term ASEAN regional scalerating was affirmed at "axB," but its long-term ASEAN regional scalerating was downgraded to "axBB-" from "axBB." The ratingagency removed the ratings from CreditWatch, with negative implications.
Vietnam Eximbank's profit has been falling for the lastseveral consecutive years and its return on assets was almost zero in 2015, therating agency said. It added that in October 2015, the State Bank of Vietnamdiscovered accounting irregularities in Vietnam Eximbank, which resulted in thebank reversing sale profits previously recognized, causing an accumulated lossof 817 billion dong.
S&P noted that the bank is trying to reduce theaccumulated loss by the end of 2016 by refocusing on the higher-yielding smalland medium-sized enterprise segment, leveraging on its trade finance franchiseto boost fee income and implementing cost controls to manage operating expenses.While S&P believes this strategy is sound, the negative outlook on thebank's rating reflects the view that the bank's profitability is unlikely toimprove rapidly enough over the next 12 months to offset its accumulated losses.
The rating agency may lower the ratings of Vietnam Eximbankif the lender's capital and earnings remain under pressure. The outlook on thebank's ratings may be raised to stable if the bank can clear its accumulatedloss and preserve its capitalization.
As of July 18, US$1was equivalent to 22,301.00 Vietnamese dong.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.