According to reports released on its website, Moody's assigned local currency deposit ratings of B1/NP; foreign currency deposit ratings of B2/NP; a baseline credit assessment (BCA) of B2; and an adjusted BCA of B2 to the Bank for Foreign Trade of Viet Nam (Vietcombank).
Vietcombank's ratings outlook on the issuer and deposit ratings is stable.
Moody's has also assigned counterparty risk assessments (CR Assessment) of B1(cr)/NP(cr) to the bank.
Vietcombank's B1 local currency deposit rating has been raised by one notch from its B2 BCA.
"We do not incorporate any affiliate support assumptions from Mizuho Bank, Ltd (Mizuho) [A1 stable, Baa1] into Vietcombank's supported ratings, because of its relatively small ownership stake of 15 per cent," Moody's said.
According to Moody's, the B1 local currency deposit rating assigned to Vietcombank reflects the combination of the bank's B2 baseline credit assessment (BCA), and a one-notch rise for expected support from the government of Viet Nam (B1 stable) in case of stress. Vietcombank's foreign currency deposit rating is positioned at B2, in line with Viet Nam's foreign currency deposit ceiling.
Headquartered in Ha Noi, Vietcombank reported total assets worth VNĐ662 trillion (US$29.3 billion) as of March 31, 2016.
On the same day, Moody's also assigned local and foreign currency issuer ratings of B3/NP; local and foreign currency deposit ratings of B3/NP; a standalone baseline credit assessment (BCA) of Caa1; and an adjusted BCA of Caa1 to Viet Nam Maritime Commercial Joint Stock Bank (MSB).
MBS's ratings outlook on the issue and deposit ratings to Maritime Bank is positive.
According to Moody's, MSB's B3 long-term ratings reflect the bank's baseline credit assessment (BCA) of Caa1 and a one-notch jump due to Moody's expectation of moderate support from the government of Viet Nam (B1 stable), in case of stress.
According to Moody's, MSB's profitability is weak mainly because of its high loan loss provisions. The bank channelled 77 per cent of its pre-provision income into reserves in 2015, down from 82 per cent in 2014.
Moody's expects MSB's provisioning expenses to remain high in 2016 and 2017, as the bank gradually works out its problem exposures.
MSB's liquidity position is robust, with liquid assets accounting for about 52 per cent of the total assets. Customers constituted 69 per cent of the total liabilities at the end of 2015, of which the majority was derived from individuals.
"While the BCA of Caa1 indicates that the bank is operating under regulatory forbearance, the positive outlook on the supported ratings reflects the bank's committed and ongoing efforts to resolve its legacy of problem assets, which should lead to improved asset quality and profitability metrics. Given the large size of these legacy accounts and positive expectations around recovery, this could lead to meaningful improvements in asset quality within the year. If successful, the material recovery of impaired assets could significantly improve the bank's solvency profile," Moody's said.
The moderate systemic support assumption for MSB is based on the bank's modest 1.3 per cent share of system deposits at the end of 2015, as well as a strong history of regulatory forbearance in Viet Nam. These resulted in a one-notch rise in its rating to reach B3, above the bank's Caa1 BCA, Moody's said. — VNS