Vietnam Banks Stable

Moody’s has forecast that the Vietnamese banking system will remain stable in the next 12-18 months, reflecting its expectation that the country’s macroeconomic stability will support the banks’ weak credit profiles, VNA reported. In a report titled “Banking system outlook—Vietnam: Resilient economic growth drives stable outlook”, released on December 1, Moody’s analyst Daphne Cheng said: “The banks’ balance sheet buffers are weak because of the size of their legacy problem assets. But while legacy loan levels remain elevated, transparency in relation to such problem assets has improved. Moreover, Vietnam’s rapid economic growth will improve the recovery prospects of the banks’ legacy problem assets and stabilize asset risks.” According to the ratings agency, its forecast of the stable outlook (B1 stable) is based on its assessment of five drivers: operating environment (stable); asset quality and capital (stable/deteriorating); funding and liquidity (stable); profitability and efficiency (stable); and systemic support (stable).