Operating conditions are improving for the Vietnamese banking system, according to the Standard & Poor's Ratings Services on Wednesday.
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"We have revised our economic risk score following the change in our assessment of economic imbalances," said S&P. "Our revision follows moderation in loan growth and asset prices subsequent to the Government's stabilisation policies."
The ratings services also revised Vietnam's economic risk score to ‘9' from ‘10'. It explained policy actions that the Vietnamese Government initiated in 2011 to stabilise the economy have moderated the pace of loan growth and improved asset price stability. This has reduced the risk of economic imbalances.
A tight credit policy slowed loan growth to 14.5 percent in 2011 from 28 percent on average during the previous four years. Lending restrictions on ‘non-productive' sectors – mainly property lending and securities lending – contributed to a reduction in real asset prices.
The agency said that these developments have halted or reversed a deterioration in key risk indicators. Inflation has retreated to 6.5 percent as of September 2012, from a peak of 23 percent in August 2011, which helped the central bank reduce policy rates and led to a moderation in lending rates.
"As a result of the revision of our rating on Vietnam, the anchor for a commercial bank operating only in Vietnam is revised from ‘B' to ‘B+'. We also raised the stand-alone credit profiles (SACP) of all rated banks in Vietnam by one notch," S&P said.
S&P also upgraded its counter-party credit rating for Vietcombank, Sacombank and Techcombankfrom B+/Stable/B to BB-/Stable/B.
It affirmed the ratings of the Bank for Investment and Development of Vietnam, and Vietinbank at B+/Stable/B.
