Viet Nam News
HÀ NỘI — Credit ratings agency Moody’s Investors Service has assigned its first ratings and assessment for Việt Nam’s Nam Á Commercial Joint Stock Bank, giving it a B2 stable outlook.
According to Moody’s, the ratings assigned to Nam Á Bank were based on the progress the bank had made on recovering problem assets, and an improvement in profitability. At the same time, the bank had pursued aggressive loan growth, which could weaken its asset quality and capitalisation over time. The bank’s funding quality was moderate due to its small deposit franchise in Việt Nam.
Statistics showed that Nam Á Bank’s asset quality had improved markedly since 2016 thanks to healthy cash recoveries from problem assets. As a result, its problem loan ratio fell to 4.4 per cent at the end of June 2018 from 11.3 per cent in 2017 and 25.5 per cent in 2016.
Moody’s said it expected Nam Á Bank’s asset risk would remain elevated over the next 12-18 months because of rapid loan growth of 33 per cent annually in the first nine months of 2018 and 51 per cent in 2017. These rates were much higher than other Moody’s-rated banks in the country.
In addition, the bank was gradually reducing its exposure to the real estate and construction sectors, and diversifying into green energy and manufacturing.
However, rapid loan growth would outpace internal capital generation and continue to strain the bank’s capitalisation.
The bank’s liquidity was comfortable, according to Moody’s.
The rating agency said that it could upgrade Nam Á Bank’s long-term bank deposit and issuer ratings if Việt Nam’s sovereign rating was upgraded, and the bank posted improved standalone credit metrics.
Nam Á Bank, headquartered in HCM City, reported total assets of VNĐ64.82 trillion (US$2.81 billion) at the end of June 2018.
In 2019, the bank said it would focus on enhancing risk management for stable development. At the same time, the bank planned to list on the stock exchange and apply digital banking technologies such as chatbot to improve services. — VNS