Moody’s Investors Services has recently affirmed Sai Gon-Hanoi Commercial Joint Stock Bank (SHB) B2 long-term local and foreign currency deposit ratings.(Photo: cafef.vn)
Hanoi (VNA) – Moody’s Investors Services has recently affirmed SaiGon-Hanoi Commercial Joint Stock Bank (SHB) B2 long-term local and foreigncurrency deposit ratings.
The US credit rating agency rated B3 for the bank’s baseline credit assessment(BCA) and adjusted BCA, and announced the bank’s B1/NP local and foreigncurrency Counterparty Risk Ratings, and B1(cr)/NP(cr) Counterparty RiskAssessment.
Moody’s said the outlook on SHB’s long-term ratings is stable.
The ratings are one-notch uplift based onMoody’s assessment of a moderate probability of support from the VietnameseGovernment in times of need.
Meanwhile, SHB’s B3 BCA considers its weak asset quality, which is strained byits large stock of legacy problem assets, modest profitability as a result ofhigh credit costs and poor capitalisation.
The bank’s credit growth higher than the system’s average during 2014-2017,coupled with large exposure to cyclical sectors like agriculture, constructionand real estate posed further downside risks to its asset quality.
As of the end of 2018, SHB’s problem loan ratio was stable from a year earlierat 7.8 percent. In Vietnam, Moody's defines problemloans as loans under categories 2-5 of Vietnamese accounting standards, andgross bonds issued by the Vietnam Asset Management Company (VAMC).
SHB's return on tangible assets improved mildly to 0.59 percent in 2018 from0.54 percent in 2017. Total revenue improved in line with loan growth andmargin expansion, although the improvement was offset by high operating andcredit costs.
Moody's expects SHB's profitability to hover at current levels as the bankcontinues to make provisions against its large stock of problem assets.-VNA
VNA
