Fitch: Concerns for Vietnam banks

Fitch Ratings said in a new report that Vietnamese banks' credit profiles broadly remain under pressure, due to excessively strong credit growth, which has been a means of facilitating Vietnam's economic expansion.

The key concerns for the sector are its reduced capital buffer against potential higher credit costs arising from underlying weak loan quality, Fitch said, and its vulnerability to capital market conditions.

Margins at Vietnamese banks also have been weakening, in line with competition for fund mobilization, the agency said.

Fitch said it expects credit to expand at a faster pace in the second half of 2010, implying that it is on track to record its fourth straight year of growth exceeding Vietnam's GDP by more than 3x.

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