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Fitch upgrades 3 state-owned Vietnamese banks, lowers outlook to stable

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Fitch upgrades 3 state-owned Vietnamese banks, lowers outlook to stable

Fitch Ratings upgraded the long-term issuer default ratings of three Vietnamese state-owned banks — Vietnam Joint Stock Commercial Bank for Industry & Trade, or Vietinbank; Joint Stock Commercial Bank for Foreign Trade of Vietnam, or Vietcombank; and Vietnam Bank for Agriculture & Rural Development, or Agribank.

The rating agency said May 22 that it upgraded the long-term issuer default ratings of the three banks to BB- from B+ and lowered the outlook on the ratings to stable from positive. It also upgraded the lenders' support rating floor to BB- from B+ and their support rating to 3 from 4.

The three banks' short-term issuer default ratings were affirmed at B.

In addition, Fitch revised the support rating floors of Military Commercial Joint Stock Bank, or Military Bank, and Asia Commercial Joint Stock Bank, or ACB, to B- from NF, and affirmed both banks' support rating at 5.

The rating actions follow Fitch's upgrade of Vietnam's sovereign rating to BB from BB-, with a stable outlook.

The upgrades of the ratings of Vietinbank, Vietcombank and Agribank are driven by the upgrades of their respective support rating floors, which reflect the improving sovereign profile, declining debt levels and rising external buffers, Fitch said. It added that these factors should enhance the Vietnamese government's ability to provide extraordinary support to the banks, if needed.

The revision of the support rating floors of Military Bank and ACB also reflect the government's improving ability to provide extraordinary support.

The support ratings and support rating floors of all five Vietnamese banks are sensitive to perceived changes in the government's ability and propensity to provide extraordinary support, the rating agency said.