S&P affirms Vietcombank rating at BB- on strong business position

SINGAPORE- S&P Global Ratings has 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. S&P also affirmed its 'axBB+' long-term and 'axB' short-term ASEAN regional scale ratings on the Vietnam-based bank.

"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 Vietnam, and the high likelihood of government support," said S&P Global Ratings credit analyst, Amit Pandey.

"The bank's weak capitalisation tempers these strengths. We assess the bank's stand-alone credit profile (SACP) as 'bb-'.

“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 12-18 months at least.”

S&P adds: “We believe 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% over the next 12-18 months, compared with 3.5% as of December 31, 2015.
 
“We anticipate that the bank's loan growth will be 18%-20% over the next few years. Vietcombank is also likely to have stable profitability, with a ratio of core earnings to average assets of around 0.8% and dividend payout of 10% of the face value of shares over the period. Our forecast assumes no capital infusion.”  www.standardandpoors.com (ATI).