Global credit rating agency Fitch has recognized the Vietnam government’s efforts to improve economic policy and promote macroeconomic stability and has noted that banks have made improvements in the improvement of asset quality and increased capital levels, by rewarding the banking sector with improvements in their ratings.
The long-term default ratings of the country’s biggest lenders are:
Agribank B+ rating / positive outlook & B+ viability rating
Military Commercial Bank B+ rating / stable outlook
Vietinbank B+ rating / positive outlook & B viability rating
Vietcombank B+ rating / positive outlook & B viability rating
Asia Commercial Bank (ACB) B rating / stable outlook.
According to Fitch: “The positive rating action takes into account the Vietnamese banking system’s enhanced operating environment, with improved economic policy-making from authorities promoting macroeconomic stability and predictability.”
The banks were upgraded thanks to higher capital levels and improvements in their asset quality, which is reflected via diversified loan composition and declining rate of bad debt.
The majority of bad debt in Vietnam’s banking sector is related to Vietnam’s real estate market and bad loads which occurred in the 2010 ~ 2015 period. According to the National Financial Supervisory Commission, this debt equaled an average of 9.5% of bank loans in 2017. At the same time, the General Statistics Office noted that credit expanded by an estimated 16.96% in 2017 so the overall ratio of bad loan debt has decreased from previous years.
In October 2017, credit ratings agency Moody’s upgraded its outlook for Vietnam’s banking system from stable to positive for the next 12 ~18 months, reflecting the country’s strong economic prospects. The Vietnamese government expects the economy to expand 6.5-6.7% in 2018, following record 10-year growth of 6.81% in 2017.