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Moody’s upgrades VIB’s rating to B1

Moody’s Investors Service has upgraded the baseline credit assessment (BCA) of Vietnam International Bank (VIB) to B1 and Counterparty Risk Assessment (CRA) to Ba3.

 

The upgrade to VIB’s BCA and other banks’ was driven by the higher macro profile of Viet Nam, progress in writing off legacy problem assets and profitability of banks, according to a report from Moody’s.

In his speech at a recent conference hosted by Moody’s in HCM City, VIB Deputy CEO Ho Van Long said VIB and other healthy banks had taken four measures, including raising capital from increasing profits, raising Tier 1 capital from domestic and foreign funding and Tier 2 capital, beside optimising risk-weighted assets in order to raise capital and CAR.

Long was the only representative from local banks to be invited by Moody’s to the event, which assessed Viet Nam’s economy, the banking system’s ratings, and forecasts on the economy’s outlook and local banks’ performances in 2019.

After upgrading the Government of Viet Nam’s long-term issuer and senior unsecured ratings to Ba3 from B1, Moody’s upgraded the long-term local and foreign currency bank deposit and issuer ratings of VIB to B1 from B2 in August.

In addition to the upgrade, VIB was recognised by the State Bank of Viet Nam (SBV) and Viet Nam Asset Management Company (VAMC) as one of five banks to have re-purchased all bad debts that they had sold to the VAMC. The move was expected to improve the bank’s profitability over the next 12-18 months as the burden of credit costs dropped, VIB said in a statement.

VIB is also one of the only two local banks ready to apply Base II standards. To date, the bank has completed the implementation and waited for the SBV’s approval for applying the standards in 2018.

In terms of retail banking (RB), the bank’s transformation which started two years ago had helped VIB develop and become one of the biggest retail banks in Viet Nam with non-performing loans in RB under 1 per cent. VIB had maintained first position in car financing and ranked in the top three for bancassurance sales.

Over the past nine months, VIB’s pre-tax profit reached VND1.72 trillion (US$75.5 million), up 176 per cent year-on-year, while its return on equity ratio (ROE) reached nearly 20 per cent and was expected to go up in the fourth quarter, according to the bank’s financial statements.

From January to September, the bank’s total assets topped over VND132.5 trillion, up 8 per cent year-to-date, while lending and deposits experienced respective rises of 13.1 per cent and 15 per cent to VND95.2 trillion and VND89.2 trillion. Its non-performing loan ratio remained at 2.5 per cent in the nine-month period.

The bank’s capital adequacy ratio (CAR) was more than 12 per cent and CAR, under Basel II, was over 9.5 per cent. Ratio of short-term deposits used for long-term loans stood at 38 per cent this year to September 30, lower than the permitted maximum limit of 45 per cent.

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Moody’s upgrades VIB’s rating to B1

Moody’s Investors Service has upgraded the baseline credit assessment (BCA) of Vietnam International Bank (VIB) to B1 and Counterparty Risk Assessment (CRA) to Ba3.

 

The upgrade to VIB’s BCA and other banks’ was driven by the higher macro profile of Viet Nam, progress in writing off legacy problem assets and profitability of banks, according to a report from Moody’s.

In his speech at a recent conference hosted by Moody’s in HCM City, VIB Deputy CEO Ho Van Long said VIB and other healthy banks had taken four measures, including raising capital from increasing profits, raising Tier 1 capital from domestic and foreign funding and Tier 2 capital, beside optimising risk-weighted assets in order to raise capital and CAR.

Long was the only representative from local banks to be invited by Moody’s to the event, which assessed Viet Nam’s economy, the banking system’s ratings, and forecasts on the economy’s outlook and local banks’ performances in 2019.

After upgrading the Government of Viet Nam’s long-term issuer and senior unsecured ratings to Ba3 from B1, Moody’s upgraded the long-term local and foreign currency bank deposit and issuer ratings of VIB to B1 from B2 in August.

In addition to the upgrade, VIB was recognised by the State Bank of Viet Nam (SBV) and Viet Nam Asset Management Company (VAMC) as one of five banks to have re-purchased all bad debts that they had sold to the VAMC. The move was expected to improve the bank’s profitability over the next 12-18 months as the burden of credit costs dropped, VIB said in a statement.

VIB is also one of the only two local banks ready to apply Base II standards. To date, the bank has completed the implementation and waited for the SBV’s approval for applying the standards in 2018.

In terms of retail banking (RB), the bank’s transformation which started two years ago had helped VIB develop and become one of the biggest retail banks in Viet Nam with non-performing loans in RB under 1 per cent. VIB had maintained first position in car financing and ranked in the top three for bancassurance sales.

Over the past nine months, VIB’s pre-tax profit reached VND1.72 trillion (US$75.5 million), up 176 per cent year-on-year, while its return on equity ratio (ROE) reached nearly 20 per cent and was expected to go up in the fourth quarter, according to the bank’s financial statements.

From January to September, the bank’s total assets topped over VND132.5 trillion, up 8 per cent year-to-date, while lending and deposits experienced respective rises of 13.1 per cent and 15 per cent to VND95.2 trillion and VND89.2 trillion. Its non-performing loan ratio remained at 2.5 per cent in the nine-month period.

The bank’s capital adequacy ratio (CAR) was more than 12 per cent and CAR, under Basel II, was over 9.5 per cent. Ratio of short-term deposits used for long-term loans stood at 38 per cent this year to September 30, lower than the permitted maximum limit of 45 per cent.

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