The 'BB' long-term rating on BIDV reflects a two-notch uplift over the bank's stand-alone credit rating. The outlook on the long-term rating was also an uplift but still negative by international standards, according to S&P, which assigned the bank a fundamental strength rating of 'D'.
BIDV enjoyed potentially extraordinary support from the Government of Viet Nam if the bank faced financial distress, given BIDV's systemic importance and majority State ownership, S&P noted in its report. The bank's capital base was enhanced by an injection of State capital in 2010.
The rating uplift did not fully reflect such support, S&P said, since the ratings agency did not rate any bank in Viet Nam above the foreign currency sovereign rating.
"We actually would have deserved a three-notch uplift if the sovereign ratings were higher," said a senior BIDV official who asked to remain anonymous. "Of course, BIDV's rating is still negative by international standards but a negative outlook is common for Vietnamese banks."
"These ratings are rather positive because all indicators reach the sovereign proof ratings," BIDV wrote in an emailed response to Viet Nam News. "The 'D' rating for the stand-alone is the highest level so far for Vietnamese credit institutions. S&P has recognised our improvements."
S&P believed the stand-alone rating reflected the State-owned bank's weak capitalisation, mediocre funding profile, and weak asset quality by international standards, which were partly offset by the bank's strong business position and franchise in the domestic market.
Early last month, Moody's rated BIDV's financial strength at E+ with a stable outlook. The ratings for BIDV's domestic and foreign currency deposits were Ba2/B1, while its issuer rating stood at Ba2.
The ratings were considered positive since the global economy had yet to fully recover and Vietnamese banks were facing a range of challenges.
BIDV has asked Moody's to conduct credit ratings for five years, reflecting the bank's commitments to transparency and application of international standards to business operations. — VNS
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