Standard & Poor’s Ratings Services on June 6 revised the outlooks on Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and Bank for Investment and Development of Vietnam (BIDV) to stable from negative.
At the same time, Standard & Poor’s affirmed its ‘B+/B’ issuer credit ratings on both banks.
The ratings on Vietinbank and BIDV are one notch above the banks’ respective stand-alone credit profiles, reflecting: (1) their “high systemic importance” in Vietnam’s banking system, and (2) our assessment of a “highly supportive” government, which qualifies for a one-notch rating uplift from the banks’ stand-alone credit profile of ‘b’.
The outlook revision reflects Standard & Poor’s assessment of a reduction in the risks to macroeconomic and financial stability in Vietnam. Key indicators such as credit growth, the level of foreign exchange reserves, and domestic currency interest rates have improved over the past 18 months.
Despite these improvements, Standard & Poor’s still showed worries about remaining risks of heightened macroeconomic instability in Vietnam. As the government eases its policy stance, it risks renewing concerns about its commitment to price stability. This could reverse the recent improvements.