Vietcombank's headquarters in Hanoi. (Photo: Internet)
Fitch Ratings has published Bank for Foreign Trade of Vietnam’s (Vietcombank
) Long-Term Issuer Default Rating (IDR) of ‘B+’, with stable outlook. The agency has also published Vietcombank’s Viability Rating (VR) of ‘b-’.
Vietcombank’s Long-Term IDR is driven by state support. Its SR of ‘4’ and SRF of ‘B+’ reflect Fitch’s view that the probability of state support is limited. “This takes into account the limited ability of the state to provide support due to the government’s relatively weak finances, as reflected in the sovereign’s Long Term IDR of ‘BB-’ and the sizeable banking industry compared to GDP,” the rating agency said.
However, the propensity of state support is high due to Vietcombank’s systemic importance and its majority ownership by the Vietnamese government, Fitch said. Vietcombank has a strong domestic franchise and is one of the four largest banks by asset size in Vietnam.
The understatement of problem loans by reported non-performing loan (NPL) ratios across the system also suggests that Vietcombank’s capitalization is likely to be weaker than reported capital ratios (Tier-1 capital ratio of 9.4% and total capital ratio of 11.4% at end-June 2015), similar to other Vietnamese banks.