Moody's has upgraded the ratings of two Vietnamese banks, citing their improvements in the standalone credit profile.

The long-term deposit and issuer ratings of both the Viet Nam Technological and Commercial Joint Stock Bank or (Techcombank) and Asia Commercial Bank (ACB) were upgraded to B2 from B3 last week.

At the same time, the United States-based credit rating agency also lifted the two banks' baseline credit assessment (BCA) to B3 from CAA1.

Moody's also changed the outlook of both Techcombank and ACB to stable from positive.

According to Moody's, Techcombank's asset quality metrics have improved in 2014 and in the first half of 2015, although from a relatively weak base. The improvements in asset quality were driven by write-offs, recoveries and some credit growth.

The unlisted bank's problematic assets decreased to 12.8 per cent of gross loans as of June 2015, from 14.4 per cent in December 2014 and 20.1 per cent in December 2013.

The bank's balance sheet contraction – namely in available for sale securities – led to an improved equity-to-assets ratio of 9.1 per cent as of June 2015, from 8.5 per cent in December 2014. During the same period, the bank's tangible common equity-to-risk weighted assets also improved to reach 10.1 per cent from 9.2 per cent.

Moody's said that it also viewed as positive that the bank was not materially reliant on market sources for funding, with its ratio of market funds to banking assets amounting to 14 per cent as of June 2015. As of the same date, liquid assets such as cash, interbank, government bonds and trading securities amounted to 36 per cent of the assets.

"These liquid assets were of relatively good quality, because government securities made up about one-third of the balance," Moody's said.

It said the ACB's asset quality metrics had stabilised as the management pursued a more conservative strategy on loan growth.

"While problem loans still account for a large proportion of the total assets, the bank has made gradual progress in resolving or writing off its problem exposures," it said.

ACB's problem loans ratio declined slightly to reach 4.66 per cent at the end of June 2015, from 4.75 per cent at the end of 2014, and down from a high of 7.77 per cent at the end of 2012. Moody's attributed some of the improvement to the transfer of assets to the Viet Nam Asset Management Company.

ACB's moderate loan growth has also further reduced the risk that newer loans could deteriorate and materially weaken asset quality. Loan growth was nine per cent in 2014 and three per cent in 2013, significantly below the system averages of [15 per cent] in 2014 and [15 per cent] in 2013, Moody's said.

The bank's profitability has also stabilised, with core revenue growth – including net interest and fee income – of six per cent in 2014, following a 32 per cent reduction in 2013. — VNS

Banks seek partnerships at international finance conference

Six Vietnamese commercial banks are attending the SWIFT International Banking Operations Seminar (SIBOS) 2015, which will end in Singapore tomorrow.

Representatives from Vietcombank, BIDV, Vietinbank and Eximbank, as well as SHB and Pvcombank, are among the 7,000 business leaders, decision makers and experts from a wide range of financial institutions, multinational corporations and technology firms taking part in the four-day event this year.

SIBOS, a conference, exhibition and networking forum for the finance industry, is organised annually by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a global provider of secure financial messaging services in the areas of payments, securities, cash management and trade.

Nguyen Thi Huong from the State Bank of Viet Nam said it was a great opportunity for Vietnamese banks to access new banking products and services as well as promising partners.

Nguyen Trong Khoa, director of Vietcombank's payment centre, said the bank was looking for new partnerships, and he hoped to learn firsthand about the latest payment solutions and trends in the United States and Europe at SIBOS 2015.

According to VIETSWIFT, Viet Nam ranked 58th out of 210 SWIFT users worldwide and saw its traffic grow 14 per cent last year to approximately 10 million sent and received messages. Of the figure, payment messages accounted for 74 per cent, followed by overseas transfer messages that comprised 9.64 per cent.

SIBOS 2015 focuses on the financial market infrastructure, cloud computing, network security and the application of ISO 20022, a new standard for electronic data exchange between financial institutions.

Attendees will also discuss business strategies and networking, while collectively shaping the future of the global financial industry. VNS