Fitch has upgdraded ratings of Vietinbank and Agribank from "B" to "B+". – Photo Baomoi

SINGAPORE (Biz Hub) – Fitch Ratings has upgraded the ratings of Vietnam Bank for Agriculture and Rural Development (Agribank) and Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank).

The global rating agency has upgraded the Long-Term Issuer Default Ratings (IDRs) and Support Rating Floors (SRFs) of Agribank and Vietinbank to 'B+' from 'B', reported Reuters.

This follows the upgradation of Viet Nam's sovereign rating. The outlook of the banks has been revised to "stable" from "positive", reflecting a similar revision of the sovereign's outlook.

The improvement in both banks' IDRs reflects Fitch's view that the sovereign's ability to provide extraordinary support, if needed, has improved.

It follows the upgrading of Viet Nam's ratings to 'BB-' from 'B+' on November 3, 2014, which takes into account the improvement in macroeconomic stability and favorable external finances, despite large contingent risk due to a weak banking sector.

The Long-Term IDRs of Agribank and Vietinbank are driven by state support, according to Fitch. The banks' Support Ratings (SRs) and SRFs also reflect Fitch's expectation of likely extraordinary state support as both banks are majority-owned by the government.

The Fitch Ratings also rates the two banks among the most systemically important banks in the domestic economy.

Also according to Fitch, Agribank and Vietinbank are the largest and second-largest banks, respectively, by asset size in Viet Nam, with dominant domestic franchises. – REUTERS/VNS