Transactions are carried out at VIB. Moody's has changed the outlook on the bank to positive. — Photo vcmedia.vn

HA NOI (Biz Hub) — Credit rating agency Moody's has changed the outlook on Vietnam International Bank's (VIB's) long-term deposit and issuer ratings to positive from stable.

Moody's said in an online report on September 18 that the change was driven by improvements in the bank's standalone credit profile, to which the agency assigned a b3 baseline credit assessment.

Specifically, the bank's asset quality metrics have improved, and it has demonstrated a conservative growth appetite and prudent capitalisation strategy.

VIB's problem loans ratio decreased to 3.7 per cent of gross loans as of June 2015, from 4.14 per cent in December 2014. The proportion of other problematic assets also decreased to 1.6 per cent from 2.2 per cent over the same period.

These improvements in the bank's asset quality metrics were driven by its sale of loans to the Viet Nam Asset Management Company (VAMC) against the firm's special bonds.

Such VAMC transactions improved the transparency of its asset quality metrics and forced the banks to create 20 per cent provisions per year. The bank's net exposure to the company's bonds increased to 3.7 per cent of assets as of June 2015, from 2.7 per cent as of December 2014.

The bank also continued to channel a large part of its pre-provision income into loan loss reserves, with loan loss provisions accounting for half of the pre-provision income in the first half of this year.

VIB's credit growth appetite remains conservative, and it reported an eight per cent increase (non-annualised) in gross loans in the first half of this year, which is in line with the domestic banking system's average.

Its equity to assets ratio improved to 10.8 per cent as of June 2015, from 10.5 per cent in December 2014, providing it with the highest capital buffer among the nine Moody's-rated banks in Viet Nam.

Its liquidity position also remains strong, with cash and government bonds accounting for some 32 per cent of assets as of June 2015.

Moody's has also affirmed the B2 long-term and NP short-term bank deposit and issuer ratings of VIB. The Ha Noi-based bank had total assets of some VND77.37 trillion (US$3.4 billion) at the end of June. — VNS