bảng đánh giá ngân hàng việt nam của FITCH

Executive Summary
In 2008, Vietnam experienced a bout of high inflation (peaking at 28% in August) ?"
after the very strong loan growth of previous years (as well as buoyant domestic
and external demand) was compounded by high commodity prices. To address the
issue, the central bank raised policy rates dramatically and took other measures. As
a result, however, loan growth basically came to a halt in H208, and in late
2008/early 2009, the central bank reversed tack and lowered rates again.
Thankfully, inflation appears to be abating anyway. Vietnam also recognised other
difficulties in 2008, including a sharp decline in stock market and property prices,
after evidence of considerable overbuilding in recent years. In future, exporters are
likely to face difficulties given slowing global demand, as are importers given
weakening domestic demand and a notable 9% depreciation in the VND since
end?2007.
As a result, 2009 onward is likely to prove very challenging for Vietnam?Ts banks with
loan quality bound to deteriorate, particularly in relation to the broad property
development sector and USD?denominated loans (both of which are significant ?" 9%
of system loans at end?October 2008 and 22% of system loans at end?June 2008,
respectively), as well as exporters, importers and borrowers, especially given the
very strong loan growth by the banks in the lead?up to these difficulties.
Preliminary FY08 data already shows some slight deterioration in loan quality (with
the central bank?Ts official NPLs at 3.5% under Vietnamese Accounting Standards
(VAS) and with classified or impaired loans under IFRS no doubt considerably higher
than this. SMEs are likely to be more vulnerable than larger corporates, which are
more likely to have the financial wherewithal, diversity and franchises to withstand
the much more difficult economic environment. In addition, many such larger
corporates are statê?owned and may therefore benefit from direct support from the
government if required.
As a result, Vietnam?Ts smaller private banks, which tend to mostly focus on SMEs,
appear to be more exposed than the four main statê?owned commercial banks (or
SOCBs, with about 52% of system?wide assets at end?2008), which tend to focus on
larger, often statê?owned corporates. At the same time, however, the starting
point for the smaller banks in terms of financials is better than for SOCBs; with less
problematic loans, more capital and higher levels of prê?provisioning profitability.
Furthermore, there is a concern that the SOCBs?T borrowers are generally more
exposed to the property development sector. In addition, the SOCBs may well come
under pressure from the government to support larger borrowers if required, and
the economy in general as part of the authorities?T stimulus measures, which
potentially stores up problems for later, albeit presumably only to be ultimately
covered by the state.
To gauge the extent to which the Vietnamese banks it covers are exposed to future
problem loans, Fitch Ratings has conducted a basic scenario analysis on them,
assuming varying levels of NPLs (10%, 15% and 20%). While most of the banks remain
solvent under the scenarios ?" with Asia Commercial Bank (ACB, rated Individual
?~D?T), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank, rated Individual
?~D?T) and Bank for Foreign Trade of Vietnam (Vietcombank, rated Individual ?~D?T)
coming out better than average ?" in general, the exercise points to the likely need
for more capital at all the banks, particularly with regard to some of the less wellcapitalised/
more exposed statê?owned banks.

Operating Environment
In 2008, Vietnam?Ts economy faced significant challenges, most notably high
inflation, which was fuelled by strong loan growth in recent years, generally strong
demand (both domestically and externally), and high commodity prices. Operating
conditions worsened towards the end of the year and this is set to continue as
Vietnam?Ts export?oriented economy 1 is pressured by the slowing global economy.
For 2008, Fitch?Ts sovereign team?Ts GDP 2 growth estimate is 6.2%, (2007: 8.5%), in
line with the government?Ts official estimate. For 2009, however, Fitch forecasts
GDP growth of 2.5% with the government targeting 6.5%.
Banking Sector Overview
Vietnam?Ts banking system is dominated by four statê?owned banks, with around 52%
of system assets at end?2008. Around 36 private banks comprise roughly another
25%, with the balance substantially accounted for by a host of foreign banks. In
recent years, the private banks, being more commercially oriented, have grown
rapidly at the expense of the statê?owned banks?T market share. The foreign banks
have also grown, as opportunities improved for them after Vietnam entered a
bilateral trade agreement with the US in 2001 and acceded to the World Trade
Organisation (WTO) in 2006. Fitch considers it likely that the statê?owned banks?T
loan market share will grow in 2009 as they increase lending as part of the
authorities?T efforts to stimulate the economy (53% of total system loans of about
USD76bn at end?2008 versus 50% at end?2007 and 62% at end?2006).
In 2008, Vietnam?Ts central bank (the State Bank of Vietnam or SBV) granted five
licences to foreign banks (HSBC, Standard Chartered, ANZ Bank of Australia, Koreâ?Ts
Shinhan Bank and Malaysiâ?Ts Hong Leong Bank), which permit them to establish
100% foreign?owned subsidiary banks there. While the foreign banks are likely to
increase competition in pricing, service and product quality in the short to medium
term, Fitch expects the banking sector as a whole to benefit from allowing the
foreign banks to expand.
Inflation and Interest Rates
As inflation rose rapidly in 2008 to peak at 28% in August (see Inflation and Interest
Rates chart), the SBV took aggressive action to tighten money supply, increasing its
base rate three times in 2008, to 14.00% in June from 8.25% in January. With
inflation and economic growth subsequently slowing precipitously in late 2008/early
2009, the SBV reversed its course and
quickly lowered its base rate to 7.00% in
February 2009, to urge banks to lower
their lending rates to support SMEs and
other business borrowers which were
finding themselves cut off from credit.
Other SBV incentives to encourage banks
to resume lending included gradually
reducing the minimum reserve
requirement to 3% in February 2009
(from a high of 11% in February 2008) 3 ,
and lowering interest paid on such
reserves to 3.6% in February 2009 (from
10% at end?October 2008 ?" after raising
1 Exports, accounting for about 70% of GDP at end?2008, increased by 29.5% in 2008 with the main
items being crude oil, textiles, footwear, seafood, rice, wood products, electronics and coffee.
2 At end?2008, GDP comprised 22% agriculture, forestry and fishery, 40% industry and construction
and 38% service sector.
3 Fitch notes that preferential minimum reserve requirement ratios apply for Vietnam Bank for
Agriculture and Rural Development, which stand at 1% at present.

Cấp độ 4, cấp độ 5 thì nói lên điều gì hở bác?

it from 5% at endâ?September 2008 to support bank profitability). The SBV also
allowed the banks to use certain government bonds (that it had required the banks
to buy in March 2008) as eligible collateral for SBV refinancing, and later offered to
buy the bonds back. In addition, the SBV adjusted the coupon payments on these
bonds.
Stock Market and Property Prices
During 2008, Vietnamâ?Ts â?~VNâ?T stock
index fell 66% (see HCM City Stock
Market chart), correcting large runâ?ups
in recent years, and reflecting
domestic weakness, as well as some
â?~flight to qualityâ?T offshore. Despite this
subdued environment, the government
went ahead and sold an initial stake of
4% in Vietnam Bank for Industry and
Trade to the public (Vietinbank, rated
Individual â?~D/Eâ?T) on 25 December 2008
at 2.03x the book value, compared
with around 11x for Vietcombankâ?Ts
small IPO in December 2007. The government plans to similarly move towards
privatising the Bank for Investment and Development (BIDV, rated Individual â?~D/Eâ?T)
in 2009.
After a similarly good runâ?up, property prices experienced sharp falls at endâ?2007
and in Q108 with valuations gradually declining further since then. According to
press reports and statistics from real estate agencies, property prices declined by
as much as 60% in Ho Chi Minh City (mostly relating to condominiums) and 15%â?25%
in Hanoi in H108.
Foreign Exchange Rate
In 2008, the VND lost 9% of its value
against the USD, partly through the
SBVâ?Ts 2% devaluation in June and 3%
devaluation in December (see USD/VND
Exchange Rate chart) â?" generally the
SBV sets local interbank FX rates with a
3% daily trading band. The central bank
continues to manage the exchange rate
to support exporters and the economy.
Towards endâ?2008, USDâ?supply declined
as earnings from exports, remittances
and tourism fell. At the same time,
USDâ?demand grew as borrowers
endeavoured to pay off USD loans and shift to VND loans given the aforementioned
sharp lowering of VND interest rates (and the weakening VND exchange rate). At
endâ?2008, Vietnamâ?Ts foreign reserves stood at USD20.3bn versus USD23.7bn at
endâ?2007.
Regulatory Environment
Bank regulation in Vietnam is relatively basic and still developing. The key
prudential indicators appear reasonable (see Table 1), although the numerous new
rules introduced over the last few months may be difficult to strictly implement at
both the bank and regulatory level, including several ad hoc SBV requests for data
on real estate lending, lending to SMEs and NPL classifications, which are all areas
of concern. In November 2008, however, the SBV guided banks to prioritise
financing to the export and import of essential commodities, agriculture and rural
development, SMEs and certain projects

In addition, Fitch has concerns on the banks?T loan pricing practices as risk?adjusted
pricing is rarely applied, although this is somewhat mitigated by the very
conservative approach to collateral. The agency also notes that the regulatory
lending rate cap, at 1.5x the base interest rate, may not be enough to allow the
proper pricing of corporate loans to cover expected losses, particularly in a low
interest rate environment. In addition, while the SBV has announced the
introduction of a negotiable interest rate mechanism for consumer and credit card
loans to account for borrowers?T varying creditworthiness, it is not yet clear how this
will work in practice.
Table 1: Selected Regulatory Requirements

Base rate 7.0
Lending rate cap 10.5
Deposit reserve requirements 3.0
Interest rate on deposit reserves 3.6
Total CAR > 8
Securities related lending Max 20% of equity
Large exposure to single customers Max 25% of own equity
Large exposure to customer groups Max 60% of own equity
Total equity investments Max 40% of own equity
Source: SBV, Fitch
Fitch notes that in recent weeks, the SBV has established a programme of
subsidising lending rates for certain types of borrowing (eg working capital loans
required by exporters and importers), by taking 4pp off the banks?T market lending
rates of 8.5%?10% for short?term loans. The statê? and privately owned banks have
earmarked very large loan volume budgets for this programme. Nevertheless, to
what extent this results in additional loan growth is not clear as trade flows have
reduced substantially. Nevertheless, it should aid these borrowers?T cash flows and
therefore result in otherwise lower NPLs (assuming the banks use it cautiously). The
SBV has also requested banks be proactive in restructuring loans where necessary
and statê?owned BIDV will reportedly provide interest?free loans to certain troubled
borrowers. Whether or not regulatory forbearance is ultimately granted to the
banks in terms of NPLs reporting/provisioning and or capitalisation remains to
be seen.
Operating Environment Impact on the Banking Sector
Loan Quality
The aforementioned economic and monetary developments made for a very
challenging operating environment for Vietnam?Ts banks during 2008. At 21%, loan
growth was well below 2007?Ts 54% and 2006?Ts 25% (see Growth of the Banking
System chart). Furthermore, the bulk of
2008?Ts loan growth was in the first half
of the year (18%); growth stagnated in
H208 as banks were reluctant to lend
amidst the greatly changed
environment of high inflation and
interest rates, in an effort to preserve
their liquidity and asset quality. Rather
than lend to weaker customers, the
banks invested in government bonds.
Meanwhile, the demand for credit from
better quality customers at the high
lending rates was relatively low.
0
20
40
60
80
100
120
2003 2004 2005 2006 2007 H108 2008
Loan growth Loans/deposits

Given the weaker domestic economic outlook, and considering the strong loan
growth over the last few years, the agency expects sizeable pressure on loan
quality in future, versus the relatively low system?wide 3.5% NPL ratio at end?2008
as reported by the SBV using VAS ?" notably, the rate of classified or impaired loans
using IFRS is likely to be 3x?5x higher based on data from those Vietnamese banks
that have reported such information. Fitch expects impaired loans under IFRS
(substandard, doubtful and loss) to stand at around 13% of total system loans. At
end?2009, Fitch currently expects the system?Ts classified loans ratio to further
deteriorate to 17%. The agency notes however that delays in reporting NPLs could
suppress the NPL ratio in 2009 ?" as will brisk loan growth should this arise ?" and
delay the necessary impairment charges.
Fitch is most concerned about corporate loan quality (SMEs in particular) as they
account for the bulk of sector loans. Meanwhile, retail lending (7% of system?wide
loans) is relatively undeveloped and has so far been conducted on a fairly
conservative basis, mostly in the form of mortgages, at low loan?tô?market (LTM)
value ratios. The more difficult operating environment in Vietnam in 2008 with its
higher inflation and interest rates, falling property prices, and difficulty accessing
credit, is likely to be compounded in 2009 by a slowdown in the domestic economy
on the back of slower global growth. SMEs with their generally weaker financial
profiles and limited diversity appear most vulnerable, especially those that supply
the property development industry, as well as exporters given slowing global
growth, and importers given slower domestic demand and VND weakness (and their
tendency to borrow in USD). Larger, often statê?owned, corporates meanwhile,
should be better positioned thanks to stronger financial resources, greater
operational diversity and more solid franchises. Furthermore, some of these larger
corporates may well be directly supported by the government in the event that
they face severe financial stress.
Whether these larger borrowers include property developers, however, remains to
be seen; some large statê?owned companies are believed to be quite heavily
invested in this sector. In this regard, Fitch notes that declining property markets
are likely to result in higher losses on construction loans and loans financing
property investments. According to the SBV, direct property
investment/development loans amounted to VND115trn at end?October 2008, which
corresponds to about 9% of banking system loans (14% at end?2007, see Table 2);
53% thereof reportedly in Ho Chi Minh City. The share of such direct property
lending to total loans varies considerably for the banks under Fitch?Ts coverage, with
BIDV and the other statê?owned commercial banks being most exposed (see Table
2). In addition to direct lending to the construction sector, VND500trn in loans or
55% of total system loans at end?October 2008 were backed by real estate collateral
according to the central bank (no breakdown between residential and commercial
property related collateral is available). However, Fitch continues to view the local
banks?T collateral assessments as relatively conservative. In the case of mortgages
for example, banks generally apply a 50% haircut to a property?Ts market value,
against which they usually lend around 70%. This approach results in a relatively
low 35% LTM value ratio and should give the banks some protection against the
downturn in the residential property markets. Collateral requirements for
commercial property investments and developments are also believed to be
relatively conservative. Nevertheless, in the event of widespread defaults, property
price pressure is likely be very severe. Meanwhile, inefficiencies in the legal system
may well render the banks reliant on negotiations with borrowers for repayment,
resulting in substantial loan forgiveness.
In addition, higher defaults on USD loans remain a possibility with (rê?)payments on
those loans becoming more expensive as the local currency depreciates. At end?
June 2008, foreign currency loans stood at a substantial 22% of total loans. At this
time, the foreign currency loans?tô?deposits ratio stood at 87% (83% at end?2007
and 73% at end?2006). However, given relatively strong demand for foreign currency

deposits towards the end of the year, this ratio declined somewhat by end?2008.
Fitch would expect the ratio to decline further in 2009 as VND lending rates have
reduced again, and due to VND weakness, which could motivate customers to
replace USD loans with VND loans. This would consequently reduce the volume of
riskier USD loans, which Fitch would view positively, provided that overall, assets
and liabilities in USD and gold continue to match. To date, Fitch has not observed
any material gaps between assets and liabilities in foreign currency and gold for the
banks under its coverage. However, if such gaps were to build up, eg due to
borrowers defaulting on their USD loans while USD liabilities automatically increase
as the VND depreciates further, unrealised foreign exchange differences on assets
and liabilities could weigh on banks?T profitability.
Margins
Lending spreads in Q408 (average lending rates less deposit rates) remained fairly
stable at around 3% for the VND and USD business (see Average Lending and Deposit
Rates chart), which indicates that net interest margins (NIMs), although under
pressure, have held up reasonably well. Fitch expects the sector?Ts NIM to stand at
around 2.5% in FY08 and forecasts a slight decline to 2.4% in FY09. NIMs could
however come under further pressure if and as the base interest rate and
consequently the lending rate cap continue to decline. On balance, however,
adequate net interest income should absorb most of the banks?T required
impairment charges and support the banks?T profitability in FY08 and FY09. Fitch
does not expect a net loss for the system in 2009; the agency forecasts an ROA of
around 0.2% (versus a 2008 estimate of 0.8% and 2007 actual of around 1.4%).
0
5
10
15
20
25
Sep 08 Oct 08 Oct 08 Nov 08 Nov 08 Dec 08 Dec 08 Jan 09 Jan 09 Feb 09
Lending CAP VND lending VND deposit USD lending
USD deposit VND spread USD spread
Average Lending and Deposit Rates
Source: SBV, Fitch
Liquidity
During H208, the banks?T liquidity eased and the system?Ts loans?tô?deposits ratio fell
to 95% from 104% at end?H108. Deposit growth (2008: 20%, 9M08: 11%) finally
caught up with loan growth in Q408 due to fairly strong growth in foreign currency
deposits in December (5.9% versus 2.6% for VND deposits) shortly before the SBV
devalued the VND by 3% at end?December 2008. To support profitability and NIMs,
some banks have tried to match weak and even negative loan growth with a
reduction in deposits by lowering their deposit rates more than average. Fitch
considers such a strategy, which focuses on profitability just after an admittedly
short but nevertheless quite severe period of very tight interbank liquidity, to be
quite aggressive, even if conducted by the larger privately owned banks with
generally sound deposit franchises. Deposits tend to chase the highest rates offered,
although they are likely to accrue at the statê?owned banks in the event of a ?~flight
to quality?T during any system?wide deterioration, given greater expectations of
government support for them and despite their weaker standalone credit risk
profiles.
Fitch expects variations in the development of the loan?tô?deposit ratios (LDRs) at
individual banks. Whereas the agency expects declining LDR ratios for Sacombank
and ACB as their deposit bases increased faster than their loan balances in 9M08

(see Table 3 below), it expects stable to increasing ratios for the SOCBs given their
more pronounced loan growth. Vietcombank, for example, achieved 16% loan
growth, but only 12% deposit growth in 2008 and Vietinbank has advised that it
realised loan and deposit growth of 18% and 17%, respectively, for 2008. BIDVâ?Ts LDR
should remain relatively unchanged as, according to preliminary figures, its loans
and deposit base grew by 26%, respectively, in 2008.
Table 3: Joint Stock Bankâ?Ts Growth
ACB Sacombank
Q308 9M08 2007 Q308 9M08 2007
Loans â?14 13 87 â?16 â?7 146
Securities 4 52 98 â?7 5 523
Customer deposits 5 22 85 â?4 8 147
Total assets 8 29 91 â?12 3 161
Source: Bank financial statements reclassified by Fitch
Scenario Analysis
To gain an insight into the financial robustness of the Vietnam banks Fitch covers,
given the much more difficult operating environment, the agency has applied a
basic stress test, using three loan quality deterioration scenarios as discussed below.
In doing this, Fitch has consistently used historic financial data according to VAS.
Assumptions and Methodology in Five Steps
One â?" In the first instance, Fitch assumed a 20% growth rate to the banksâ?T endâ?
FY07 gross loan balance using VAS, to achieve an estimated loan balance for endâ?
FY08 (noting that 20% loan growth was in line with that for the system in FY08 and,
in general, for the individual banks, based on data available to date).
Two â?" Fitch then broke down gross loans via five loan quality classifications
(current, special mention, substandard, doubtful and bad), using three scenarios
(NPLs of 10%, 15% and 20% â?" each with a standard 25% level of special mention
loans) â?" see Table 4.
Table 4: Loan Portfolio Stress Tests
Stress 1 Stress 2 Stress 3
Reserve
Requirement
A (current) 60.0 60.0 55.0 0.0
B (special mention) 25.0 25.0 25.0 5.0
C (substandard) 4.0 6.0 8.0 20.0
D (doubtful) 3.0 5.0 6.0 50.0
E (bad) 3.0 4.0 6.0 100.0
Total gross loans 100.0 100.0 100.0 â?
NPLs (C to E) 10.0 15.0 20.0 â?
New Credit Costs a 6.6 9.0 11.9 â?
Average NPL reserve coverage 65.5 59.7 59.3 â?
a Loan loss provisions as per stress test/gross loans
Source: Fitch
Three â?" Fitch then multiplied these amounts by VASâ?Ts reserve requirements (also
detailed in Table 4) to determine the reserve requirement charges the banks would
incur in order to properly cover such NPLs.
Four â?" Using the reserve requirement charges data, Fitch then estimated the
banksâ?T profitability over one year â?" using FY07 profit as a base, but boosting it
slightly for a 10% increase in net interest income (given the 20% loan growth
assumption, but also assuming a tougher NIM environment as described), and
excluding certain nonâ?recurring items such as gains on loans previously written off
and securities valuation gains (which were both abnormally large in FY07).

The above is not a forecast of the banks?T profitability for FY08 or any other year,
but just one step in a process to estimate the losses that would be incurred under
the stress test scenarios. In reality, such losses would most likely be spread over a
number of years (and offset somewhat by prê?provision profit in those years).
Notably, the exercise does not take into account the banks?T starting level of NPLs
and/or loan loss reserves. This, however, is of limited impact, with all the banks,
under VAS, reporting fairly low NPL levels and substantial reserve coverage (see
Table 5).
Five ?" Finally, Fitch assumed that these losses have to be completely absorbed by
the banks?T capital bases as they stood at end?2007 (noting that there was little in
the way of capital raisings by the banks in 2008 with the exception of a small one
by Vietinbank at end?December 2008). The results are detailed in the chart below.
?6
0
6
12
Agribank BIDV Vietcombank Vietinbank ACB Sacombank
End?2007 Stress 1 Stress 2 Stress 3
Stress Test Results: Equity/Total Assets

Source: Fitch
Stress Test Results and Conclusion
Not surprisingly, given the fairly substantial level of stress applied, all the banks
incur ?~losses?T, even under the least stressful ?o10% NPL? scenario (see PBT/Total
Assets chart). Notably, Vietcombank and ACB were among the best performers, due
partly to their abovê?average core or underlying profitability, as well as the fact
that these banks have a relatively low level of total loans to total assets.
Sacombank also holds up well due to its abovê?average profitability. In addition,
with their higher capital levels, all three of these banks maintain positive
capitalisation, even under the harshest 20% stress test, although it is negligible in
the case of Vietcombank and less than satisfactory in the case of ACB and
Sacombank (see Equity/Total Assets chart). The other three banks?T capitalisation is
negative, particularly that of Vietnam Bank for Agriculture and Rural Development
(Agribank, rated Individual ?~D/E?T).