Moody's upgraded the ratings of 14 Vietnamese banks after it raised Vietnam's sovereign rating to Ba3 from B1, while changing the outlook for the sovereign's rating to stable from positive.

The rating agency said Aug. 14 that it upgraded the long-term local- and foreign-currency deposit and issuer ratings of Vietnam Joint Stock Commercial Bank for Industry & Trade, or Vietinbank, JSCB for Investment and Development of Vietnam, or BIDV, and Joint Stock Commercial Bank for Foreign Trade of Vietnam, or Vietcombank.

The long-term counterparty risk ratings and counterparty risk assessments of Vietinbank and BIDV were upgraded while those of Vietcombank were affirmed.

At the same time, Moody's upgraded the long-term foreign-currency deposit ratings of Asia Commercial Joint Stock Bank, Military Commercial Joint Stock Bank, and Vietnam Technological and Commercial Joint Stock Bank, while affirming the lenders' other ratings.

Moreover, the long-term local and foreign-currency bank deposit and issuer ratings of An Binh Commercial Joint Stock Bank, LienViet Post Joint Stock Commercial Bank, Tien Phong Commercial Joint Stock Bank, Vietnam International Commercial Joint Stock Bank and Vietnam Prosperity JSCB were upgraded. The rating agency affirmed all other ratings of the five banks.

The long-term counterparty risk ratings and counterparty risk assessments of Saigon - Hanoi Commercial Joint Stock Bank, Ho Chi Minh City Development JSCB and Orient Commercial Joint Stock Bank were raised. All other ratings of these three banks were affirmed.

The outlooks on the local currency deposit and local and foreign currency issuer ratings of Vietcombank, BIDV, VietinBank, An Binh Commercial Joint Stock Bank, LienViet Post, Tien Phong Commercial, Vietnam International Bank and Vietnam Prosperity Joint Stock Commercial Bank were changed to stable from positive.

Moody's takes into account the country's sovereign ratings as a key factor to upgrade deposit and issuer ratings for Vietnamese banks, as the country's credit strength affects Moody's assessment of the government's capacity to provide support to the banks in times of stress. The upgrade also reflects improvements in the health of the banking sector, albeit from relatively weak levels, the rating agency said.