Moody's changes outlook of 15 Vietnamese banks to negative

Moody's Investors Service has changed the outlooks on 15 Vietnamese banks to negatives from ratings under review for downgrade after taking the same action on the Government of Vietnam Wednesday.

The rating agency said in a statement on Thursday that it has confirmed the long-term local and foreign currency deposit and issuer ratings of 10 of 18 banks, and changed the outlooks for these ratings to negative from ratings under review for downgrade.

Moody's has taken rating actions on 18 Vietnamese banks

Of the 10, Moody's has confirmed the Baseline Credit Assessments (BCAs) and Adjusted BCAs of four banks, as well as the long-term Counterparty Risk Assessments (CR Assessments) and Counterparty Risk Ratings (CRRs) of six.

For five of the 18, Moody's has confirmed the banks' long-term foreign currency deposit ratings, and changed the outlooks on the banks’ long-term foreign currency deposit ratings to negative from ratings under review for downgrade.

At the same time, Moody's has also confirmed the long-term CR Assessments and CRRs of the remaining three banks.

The 18 affected banks are An Binh Commercial Joint Stock Bank (ABB), Asia Commercial Bank (ACB), Ho Chi Minh City Development JSC Bank (HDBank), JSC Bank for Foreign Trade of Vietnam (Vietcombank), JSC Bank for Investment and Development of Vietnam (BIDV), Lien Viet Post Joint Stock Commercial Bank (Lien Viet), Military Commercial Joint Stock Bank (Military Bank), Nam A Commercial Joint Stock Bank (Nam A Bank), Orient Commercial Joint Stock Bank (OCB), Saigon - Hanoi Commercial Joint Stock Bank (SHB), Southeast Asia Commercial Joint Stock Bank (SeABank).

The seven others are Tien Phong Commercial Joint Stock Bank (TPBank), Vietnam Bank for Agriculture & Rural Development (Agribank), Vietnam International Bank (VIB), Vietnam JSC Bank for Industry and Trade (VietinBank), Vietnam Maritime Commercial Joint Stock Bank (MSB), Vietnam Prosperity Joint Stock Commercial Bank (VP Bank), and Vietnam Technological and Commercial Joint Stock Bank (Techcombank).

Moody's rating actions conclude Moody's reviews for downgrade of the ratings of the 18 banks, which were initiated on October 10, 2019, after Moody's placed the Government of Vietnam's Ba3 sovereign rating under review for downgrade on October 9, 2019.

The agency noted that its rating actions on the 18 banks are driven purely by the sovereign rating action, and do not reflect a weakening of the banks' standalone financial profiles.

“The rating actions on the 18 Vietnamese banks are driven by Moody's confirmation of Vietnam's Ba3 sovereign rating with a negative outlook, following the conclusion of Moody's review of the sovereign rating.”

The confirmation of the sovereign rating reflects Moody's assessment that enhanced attention by the administration on forthcoming payments of all the government's debt obligations, direct and indirect, reduces the risk of renewed payment delays.

The negative outlook reflects some ongoing risk of payment delays on some of the government's indirect debt obligations, in the absence of more tangible and significant measures to improve the coordination and transparency around debt management within the administration.

For 10 of the 18 banks, Moody's has confirmed the banks' long-term local and foreign currency deposit and issuer ratings, and will unlikely upgrade the banks' long-term ratings, because their ratings are on negative outlook.

Nevertheless, Moody's will affirm the 10 banks' ratings with a stable outlook, if Moody's affirms Vietnam's sovereign rating at Ba3 with a stable outlook, and there are no material changes to these banks' standalone credit strength.

For the remaining eight banks, Moody's could upgrade their long-term ratings, if Moody's upgrades the banks' BCAs, due to a significant improvement in their credit fundamentals.