Fitch upgrades three Vietnam banks

Fitch Ratings said it upgraded the long-term issuer default ratings of three state-owned Vietnamese banks – Vietnam JSC Bank for Industry and Trade (Vietinbank), JSC Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Bank for Agriculture and Rural Development (Agribank) – to BB- from B+.

The actions follow the recent upgrade of Vietnam's sovereign rating to BB from BB-, Fitch explained.

The outlooks on the state-owned banks also were revised to stable from positive to mirror a similar revision to the sovereign's outlook, the agency said.

The upgrades are driven by the upward revisions of the bank's support rating floors, which reflect the improving sovereign profile, Fitch said.

Vietnam has an improving macroeconomic performance, declining debt levels and rising external buffers that should enhance the state's ability to provide extraordinary support to the banks, if needed, the agency said.

Fitch said it expects government support will be forthcoming, if needed, given the banks' high systemic importance and the government's controlling stakes.

The upgraded ratings include Vietinbank's long-term issuer default rating to BB- from B+ with stable outlook; Vietcombank's long-term issuer default rating to BB- from B+ with stable outlook; and Agribank's long-term issuer default rating to BB- from B+.

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