Moody’s upgrades VPBank’s rating to Ba3
Moody’s upgrades VPBank’s rating to Ba3
Global credit rating firm Moody’s Investors Services has upgraded Viet Nam Prosperity Bank (VPBank)’s foreign currency deposits from B1 to Ba3 which is equal to the country’s rating with positive outlook.
Moody's BCA ratings reflect the independent intrinsic strength of the issuer. This credit rating is assessed based on the macro-environment, financial profile and qualitative assessment factors. In addition to upgrading the BCA rating, Moody's also upgraded VPBank’s long-term local and foreign currency deposit ratings, rising to Ba3.
VPBank's credit rating was announced after the bank completed the sale of a 49 per cent stake at its VPBank Finance Company Limited (FE Credit) to SMBC Consumer Finance Co Ltd (SMBCCF), a wholly-owned subsidiary of Japan’s Sumitomo Mitsui Financial Group, Inc (SMBC Group) at the end of October. Moody's assessed that the capital sale brought about a significant improvement in the bank's credit profile. Notably, according to Moody's methodology, the bank's capital adequacy ratio (CAR) increased from 11.4 per cent at the end of September 2021 to 13.5 per cent at the end of October 2021.
In addition to the improved capital base, the bank's outstanding business results in recent months, despite the negative impact of COVID-19 on the economy, were also highly appreciated by Moody's. The business results in the third quarter of the year showed that VPBank's consolidated before-tax profit reached more than VND11.7 trillion (US$513 million), up 24.9 per cent over the same period last year. The parent bank's pre-tax profit alone reached VND10.8 trillion, representing 75.2 per cent year-on-year increase. The bank's total consolidated operating income reached VND33.2 trillion, increasing 17.3 per cent over the corresponding period last year. Its consolidated return on assets (ROA) and return on equity (ROE) indices continued to be among the top of the market, reaching 2.8 per cent and 21.6 per cent respectively.
Moody's believed that VPBank's capital capacity will continue to be stable, as the bank has clearly demonstrated its plan to use capital obtained from the FE Credit deal to promote growth and seek new business investment opportunities. In addition, the assets scale will be further expanded thanks to the profit growth from business activities.
“VPBank's asset quality and profitability will remain stable over the next 12-18 months,” Moody's said in the announcement, emphasising the belief that VPBank's asset quality will be well under control as Viet Nam's economy recovers and vaccination rates increase.
The upgraded ratings from a prestigious international credit rating agency like Moody's in the context that Viet Nam's economy has suffered heavy impacts from the outbreak of the COVID-19 pandemic, has demonstrated confidence of international organisations in VPBank's capital base and development plan this year and in the future. This also contributes to strengthening VPBank's position, while further enhancing its ability to mobilise capital from reputable financial institutions.
