FiinRatings: Initial Rating Public Announcement Bac A Commercial Joint Stock Bank (A-| Outlook: Stable)

FiinRatings is pleased to announce that it has assigned a first-time Long-Term Issuer Credit Rating of “A-” to ' Bac A Commercial Joint Stock Bank (“BAB”or “the Bank”) with “Stable” rating outlook.

Hanoi, 01 April 2024

FiinRatings is pleased to announce that it has assigned a first-time Long-Term Issuer Credit Rating of “A-” to ' Bac A Commercial Joint Stock Bank (“BAB”or “the Bank”) with “Stable” rating outlook.

The issuer rating on BAB of “A-” with “Stable” rating outlook reflects FiinRatings' expectation that the Bank's credit profile will be relatively stable over the next 24 months; this is supported by the Bank’s ability to maintain a stable business position, along with the Bank's good risk management capacity.

For many years, BAB has a consistent and balanced lending strategy, which focuses on sectors that are less affected by economic fluctuations, such as agriculture, forestry, fisheries and processing and manufacturing industries. In addition, the Bank's funding capability and liquidity position are also expected to remain stable due to sticky/committed individual customers' deposits base as well as a highly liquid investment portfolio, along with an appropriate interbank market trading strategy that has limited risks from the dependence on wholesale funding of BAB.

Upgrade Scenario:

•  Factors that could, individually or collectively, lead to review for positive rating action or upgrade for BAB:
• The Bank succeeded in expanding its customer base; credit growth averaged or higher than the banking system during the same period and the Bank was able to maintain this growth sustainably, without changing the current risk position; and
• Net interest margins and capital buffers improved (reflected by NIM and CAR being on par with the industry average) and stayed around 3.4% for NIM and 12% for CAR, respectively.

Downgrade Scenario:

Factors that could, individually or collectively, lead to review for negative rating action or downgrade:

• BAB's business position is weakened (reflected by the Bank’s market share) due to failure to maintain existing customer base, weak credit growth compared to previous years;
• Asset quality has deteriorated due to the Bank's expansion, changes in lending strategies to high-risk industries or significant investments in low-liquidity assets or restructured liabilities that continue to increase sharply along with poor debt recovery. Weakening asset quality will be reflected in non-performing loans and problematic loans figures.
• Liquidity position and funding abilities go through difficulties, reflected by the decline in important indicators such as stable funding ratio, broad liquid asset ratio, loan-to-deposit ratio; and
• Pressure from higher funding cost, as well as from continuously rising operating cost compared to current.

Read the full rating announcement HERE.

For more details of FiinRatings services, click HERE

Notice: Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. FiinRatings’ opinions, analyses, and rating acknowledgment decisions are for reference and are not recommendations to purchase, hold, or sell any securities, and/or debt, or financial instruments or to make any investment decisions.

About FiinRatings

FiinRatings Joint Stock Company, a member of FiinGroup and a technical collaboration partner with S&P Global Ratings, is a local licensed Credit Rating Agency in Vietnam. FiinRatings provides credit ratings and related services to issuers, creditors, and investors in the Vietnam credit market. FiinRatings is also Vietnam’s first green bonds approved verifier, in accordance with the green bond international standard by the Climate Bonds Initiative. For more information, please visit https://www.fiinratings.vn.

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