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Fitch affirms ratings of 5 Vietnamese banks

Fitch Ratings affirmed the ratings of five Vietnamese banks given the banking sector's stable performance and the country's strong economic growth.

The rating agency said March 30 that it affirmed the long-term issuer default ratings of Vietnam Bank for Agriculture & Rural Development, or Agribank, Vietnam Joint Stock Commercial Bank for Industry & Trade, or Vietinbank, and Joint Stock Commercial Bank for Foreign Trade of Vietnam, or Vietcombank, at B+ and their short-term ratings at B. Vietinbank and Vietcombank's viability ratings were affirmed at "b-."

The long- and short-term issuer default ratings of Asia Commercial Joint Stock Bank and Military Commercial Joint Stock Bank were affirmed at B. Their viability ratings were affirmed at "b."

The outlooks for all the ratings are stable.

Fitch expects that pressure on the banks' asset quality and capital from loan growth will be offset by a favorable operating environment, earnings retention and periodic capital funding. However, there is a risk that current rapid credit growth may lead to future asset quality problems. Fitch also expects profitability to be at risk due to margin compression and high impairment charges.

Fitch also warned that banks' profits, asset quality and liquidity could be affected if there is a depreciation in the Vietnamese dong due to rising U.S. interest rates.

The long-term ratings of Agribank, Vietinbank and Vietcombank are sensitive to any changes in the sovereign's creditworthiness. These ratings may also be affected by any change in the government's ability to support the banks.

The long-term ratings of Asia Commercial Bank and Military Bank are sensitive to changes in their viability ratings.