Moody’s reviews eight Vietnamese banks Moody’s Investors Service has just concluded its review of eight Vietnamese banks.   Saigon-Hanoi Commercial Joint Stock Bank’ Moody’s rating outlook is stable.  At the same time, Moody’s affirmed the long-term B1 local currency deposit and issuer ratings of Bank for Investment & Development of Vietnam. Its caa1 baseline credit assessment (BCA) was also affirmed. The outlook on the bank’s ratings remains stable. Under the review, Moody’s upgraded the long-term credit ratings and BCAs of Military Commercial Joint Stock Bank and Saigon-Hanoi Commercial Joint Stock Bank. The banks’ ratings outlooks are stable. Confirmation/Affirmation of the long-term credit ratings of five other banks was also done, with their BCAs upgraded by one notch. These five banks are Vietnam Bank for Industry and Trade, Vietnam International Bank, An Binh Commercial Joint Stock Bank, Asia Commercial Bank (and Vietnam Technological and Comm’l JSB. Ratings outlooks of these banks are stable. Moody’s also confirmed the B3 long-term credit ratings and caa1 BCA for Saigon Thuong Tin Commercial Joint-Stock Bank. The bank’s ratings outlook was revised to negative. Moody’s review of the ratings of eight other banks for upgrade was initiated on September 5, 2016, following Moody’s change of Vietnam’s (B1 stable) banking system Macro Profile to "Weak" from "Weak-." The Macro Profile captures the risks related to the operating and economic environment of the banks. The BCA of JSC Bank for Foreign Trade of Vietnam remains under review for upgrade, pending regulatory approvals and finalisation of an announced capital increase. The B1/B2 long-term local and foreign currency deposit ratings of that bank are not under review. According to Moody’s, the positive rating actions are broadly driven by the credit agency’s view that the more benign operating and economic conditions for banks in Vietnam (B1 stable) have resulted in somewhat lower solvency and liquidity risks for the majority of Moody’s-rated banks in the country. Vietnamese banks will continue to benefit from the country’s robust economic growth and from Việt Nam’s enhanced, but still weak, institutional strength. These positive developments support the banks’ funding profiles. Moody’s has captured the above mentioned macroeconomic improvements by changing the Macro Profile for Việt Nam’s banking system to "Weak" from "Weak-" in early September 2016. Despite these broadly positive rating actions, Moody’s believes that the banking system in Việt Namremains under-capitalised against the backdrop of rapid credit growth and a high share of legacy problem assets, which are not always adequately disclosed on the banks’ balance sheets. Moody’s expects that these challenges will continue to persist in the medium term, despite some improvements. VNS