Moody’s affirmation of VPBank’s ratings with the stable outlook is driven by the bank’s above-industry-average capital, stable funding and liquidity. — Photo courtesy of VPBank

HÀ NỘI — Moody’s Ratings (Moody’s) has recently affirmed VPBank’s Ba3 ratings and maintained stable outlook.

In particular, Moody’s has maintained VPBank’s Ba3 long-term foreign currency and local currency bank deposit and issuer ratings, along with the Ba3 Baseline Credit Assessment (BCA) that denotes the independent internal strength of the issuer.

Moody’s affirmation of VPBank’s ratings with the stable outlook is driven by the bank’s above-industry-average capital, stable funding and liquidity, that could weather the lingering difficulties and challenges faced by the global and national economies, and uncertainties ahead.

According to Moody’s, VPBank’s capitalisation improved significantly following its completion of the private placement of 15 per cent equity stake sale to Japan SMBC last year. The deal has bolstered the bank’s owner equity to nearly VNĐ140 trillion, the second highest in the entire Vietnamese banking system at the end of 2023. VPBank’s capital adequacy ratio (CAR), as per Moody’s methodology, increased to 15.5 per cent, the highest among all Vietnamese Moody’s-rated banks.

Moody’s, meanwhile, assessed VPBank’s funding and liquidity to remain broadly stable over the next year. The bank’s CASA ratio has increased to over 17 per cent by the end of the year which helped strengthen deposit base.

“Moody’s Ratings projects the bank’s loan will grow at around 20-25 per cent and its net interest margin (NIM) will improve over the next 12-15 months because of lower funding costs,” Moody’s wrote in its recent press release. At the same time, strategic segments including retail banking and SMEs could see the improvement of borrowers' debt servicing capacity on the back of the economic recovery in 2024 and a reduction in interest rates.

At the end of the first quarter of the year, VPBank’s consolidated credit to customer hit nearly VNĐ613 trillion, grew by 2.1 per cent compared to the beginning of the year, beating the industry’s average growth rate of 1.3 per cent and up nearly 22 per cent year-on-year. On the other hand, its consolidated customer deposits and valuable papers in the first quarter of 2024 increased by 2.4 per cent compared to the beginning of the year and by more than 21 per cent year-on-year, helping strengthen its balance sheet.

A solid capital foundation built up in 2023, coupled with the abundant liquidity, have helped optimise the bank’s cost of fund (CoF) over the quarters. As of March 31, the consolidated CoF reduced to less than 5 per cent compared to the average of over 6 per cent in the last quarter and financial year 2023, setting a clear descending funding cost trend over time.

As the first quarter of the year ended, VPBank recorded nearly VNĐ4.2 trillion in consolidated profit before tax (PBT), up nearly 66 per cent quarter-on-quarter and 64 per cent year-on-year. At the parent bank, the before-tax profit reached more than VNĐ4.9 trillion, nearly as twice as much as in the last quarter of 2023, with the total operating income (TOI) was up 15 per cent and net interest income (NII) up 25 per cent year-on-year. — VNS