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Fitch upgrades ratings of 3 Vietnamese banks on asset quality improvement

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Fitch upgrades ratings of 3 Vietnamese banks on asset quality improvement

Fitch Ratings upgraded the viability ratings of Military Commercial Joint Stock Bank, Joint Stock Commercial Bank for Foreign Trade of Vietnam and Vietnam Joint Stock Commercial Bank for Industry & Trade due to improvement in their asset quality amid an enhanced operating environment for banks in Vietnam.

Fitch on Feb. 27 said it upgraded the viability rating of Military Bank to "b+" from "b". Meanwhile, the viability ratings of Joint Stock Commercial Bank for Foreign Trade of Vietnam, or Vietcombank, and Vietnam Joint Stock Commercial Bank for Industry & Trade, or Vietinbank, were upgraded to "b" from "b-."

At the same time, Military Bank's long-term issuer default rating was raised to B+ from B, with a stable outlook. The bank's short-term issuer default rating was affirmed at B.

The rating agency affirmed the long-term issuer default ratings of Vietinbank, Vietcombank and Vietnam Bank for Agriculture & Rural Development, or Agribank, at B+, with a positive outlook. The long-term issuer default rating of Asia Commercial Joint Stock Bank, or Asia Commercial Bank, was affirmed at B, with a stable outlook. The four banks' short-term issuer default ratings were affirmed at B.

Fitch noted that the ratings action takes into account the enhanced operating environment of Vietnam's banking system, which has enabled banks to significantly cut their exposure to legacy problem loans. The upgrade of Military Bank ratings reflects the bank's higher capital levels and continued asset quality improvement.

In addition, the positive outlook on Agribank, Vietinbank and Vietcombank reflects Fitch's view of an improving sovereign ability to provide extraordinary support to the banks in times of need. The rating agency noted that it does not assign a viability rating to wholly government-owned Agribank.