Global rating firm Standard & Poor’s (S&P) on December 8 downgraded the long-run credit rating of three Vietnamese banks namely Bank for Investment and Development of Vietnam (BIDV), the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Technical and Commercial JS Bank (Techcombank) from BB- to B+.
Short-term rating of three banks was maintained at B.
The downgrade was announced after SP had applied the new methodology on evaluating the banking sector generally.
BIDV and Vietcombank were assessed to have “very weak” capital and profit, meanwhile Techcombank was ranked in the weak bank group. S&P expected, Techcombank’s ratio of capital adjusted based on related risks will be stable at 3.5 percent in next 12-18 months while the ratios of Vietcombank is forecasted at 2.5-3 percent and of BIDV now belongs to the very weak group.
S&P assessed the potential of Techcombank at the stable level, BIDV’s and Vietcombank’s dropped to negative levels.
According to the rating agency, Techcombank will continue its defensive strategy by increasing debts at modest pace and less risky assets in the challenging economy with high inflation in Vietnam.
A BIDV official said, this was the move to re-examine the rating of 44 banks in Asia Pacific according to new evaluation methodology announced in November by S&P. Accordingly, the result of evaluating operation environment will decide basic rating of banks in those countries. Because Vietnam’s credit rating had been lowered from 9 to 10, the basic rating of Vietnamese banks also was lowered to Level B.
However, S&P highly appreciated the government support for BIDV thanks to the bank’s important role in Vietnam’s banking system so BIDV’s partnership rating was raised one spot compared with the basic level to B+.
Hence, the rating downgrade of BIDV in S&P’s report will not effect to the lender’s financial capacity because the new rating methodology is enclosed with the national rating.
In addition, BIDV recently was selected to be the support agency for the merger of three commercial banks (including Ficombank, TinNghiaBank, and SCB).