Specifically, Fitch Ratings has upgraded the IDR ratings of Vietcombank and VietinBank from BB- to BB, and raised the government support rating (GSR) to bb, from the previous bb-.
This credit rating agency assessed: "The State Bank has a strong influence on the banking sector in Vietnam. SBV's supervisory activities in recent years, and its responses to recent events reinforce our view that authorities tend to be strongly supportive of the banking system in general, and state-owned banks in particular."
Vietcombank's independent strength index was also upgraded, showing that the bank's risk profile and asset quality have improved in recent years.
Vietcombank is rated as a leading state-owned bank with healthy profitability, adequate capital and liquidity, but risks related to capitalization are small.
As for Vietinbank, Fitch Ratings also emphasized the remarkable support factor from the government with banks playing an important role in the system.
Vietinbank's independent strength index remains unchanged, indicating that the bank's financial performance may continue to improve gradually over the next 12-18 months, with stable loan growth and asset quality while profitability continued to increase due to prepayment of credit provisions.
Meanwhile, MB's credit rating was upgraded by Fitch Ratings from B+ to BB-, in line with the bank's increase in GSR from b to bb-.
The bank's share structure and linkages with state-linked companies suggest more support than other mid-sized banks in Vietnam.
Fitch Ratings believes that Vietnam's sustainable economic growth will continue to support the bank's asset quality and profitability in the next 12-18 months. However, that may be influenced by risks related to its high credit growth - a common feature of many Vietnamese banks.
Source: Fitch Ratings
Compiled by VietnamCredit