A branch of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) in the northern Vĩnh Phúc Province. — Photo BIDV

HA NOI (Biz Hub) — Standard & Poor's Global Ratings on Thursday affirmed its ratings of three large Vietnamese banks.

S&P said it affirmed its 'B+' long-term and 'B' short-term issuer credit ratings of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV). The outlook on the long-term rating is stable.

S&P also affirmed its 'axBB' long-term and 'axB' short-term ASEAN regional scale ratings for BIDV.

"We affirmed the ratings primarily because we expect BIDV to maintain its strong franchise and satisfactory profitability as compared to its peers in Viet Nam," S&P Global Ratings credit analyst Amit Pandey said.

"We expect BIDV will maintain its market position and business stability over the next 12 months. The bank is the second largest in Viet Nam, with a deposit market share of 11 per cent."

S&P also expects BIDV's risk-adjusted capital (RAC) ratio to remain 2-2.2 per cent over the next 12 to 18 months, the bank's loan growth to be 18 to 20 per cent over the next few years, stable profitability with the ratio of core earnings to average assets of about 0.7 per cent, and no cash dividend payout.

"The stable outlook on BIDV reflects our expectation that it will maintain measured growth and capital management policies over the next 12 months," Pandey said.

As for the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), S&P affirmed its 'BB-' long-term and 'B' short-term issuer credit ratings for the bank. The outlook on the long-term rating is stable.

S&P also affirmed the 'BB-' long-term issue ratings on Vietinbank's outstanding senior unsecured notes.

"We affirmed the ratings because we expect Vietinbank to maintain its strong business position in the next 12 months, amid volatile operating conditions and rapid loan growth in Viet Nam," S&P Global Ratings credit analyst Ivan Tan said.

S&P's assessment of Vietinbank's business position reflects the bank's strong domestic franchise and dominant market share in loans (12.4 per cent) and deposits (9.6 per cent) in Viet Nam.

The government has chosen Vietinbank to spearhead its banking reform plan to consolidate the system into fewer and stronger banks. Vietinbank's ongoing merger with Petrolimex Group Commercial Joint Stock Bank, a smaller private bank, will reinforce its position as a key player in the domestic banking industry, according to S&P.

"We expect Vietinbank's risk-adjusted capital (RAC) ratio to remain at slightly over three per cent in the next 12 months. We believe interest rates are bottoming and interest margins will begin to stabilise," Tan said.

On the same day, S&P also said it had affirmed its 'BB-' long-term and 'B' short-term issuer credit ratings on the Bank for Foreign Trade of Vietnam (Vietcombank). The outlook on the long-term rating is stable.

"We affirmed the ratings primarily because we expect Vietcombank to maintain its strong franchise, satisfactory profitability and asset quality as compared to that of its peers in Viet Nam, and high likelihood of government support," S&P Global Ratings credit analyst Amit Pandey said.

"Our assessment of Vietcombank's business position as strong reflects our view that the bank will maintain its market position and business stability over the next 12 to 18 months at least."

S&P believes Vietcombank will have to raise capital in the next two years to maintain its growth momentum.

"We expect the bank's RAC ratio to be at 3.0-3.3 per cent over the next 12 to 18 months, compared with 3.5 per cent as of December 31, 2015. We anticipate that the bank's loan growth will be 18 to 20 per cent over the next few years. Vietcombank is also likely to have stable profitability, with a ratio of core earnings to average assets of about 0.8 per cent and dividend payout of 10 per cent of the face value of shares over the period. Our forecast assumes no capital infusion," Pandey said. — VNS