Fitch Ratings upgrades ACB's long-term credit outlook from 'stable' to 'positive'

International credit rating organization Fitch Ratings has just announced the upgrade ofACB 's long-term foreign currency credit outlook (Long-term Issuer Default Rating - IDR) from "stable" to "positive", while maintaining the "BB-" rating.

Fitch also maintained the Viability Rating (VR) at "BB-", the Government Support Rating (GSR) at "BB-" and for the first time issued a long-term local currency IDR at "BB-" with a "positive" outlook for ACB. Affirming its leading position According to the latest assessment report from Fitch Ratings, ACB achieved a number of factors that prompted the organization to adjust the rating in its assessment of long-term, sustainable development prospects such as improved credit capacity, a well-directed retail strategy, a controlled bad debt ratio along with a tight risk management system while profitability is forecast to grow and there are stable capital reserves. Fitch recorded ACB's long-term IDR rating based on the VR rating, reflecting the bank's independent credit risk management capacity. The “positive” outlook reflects expectations of improved asset quality over the next 12-18 months, supported by a favorable economic environment and the Bank’s consistent underwriting standards, among other factors that mitigate risks associated with rapid credit growth. As one of the leading private banks in Vietnam, ACB affirms its position with the highest proportion of retail credit and deposits among rated domestic private banks at 65% and 80%, respectively. These are the highest proportions among rated domestic private banks and are one of the important factors helping the bank continue to maintain stable growth.

ACB not only focuses on the retail sector but also promotes the corporate sector and accompanies to bring more value to Vietnamese enterprises. Photo: VGP/Q.Anh

ACB brings more value to Vietnamese businesses Fitch points out that ACB is not only focusing on the retail segment but also selectively promoting the corporate segment, launching many new products and services and accompanying to bring more value to Vietnamese businesses in recent times. ACB is also a bank that controls bad debt well. Although in the first 9 months of 2024, ACB's bad debt ratio increased slightly to 1.5%, this ratio is still lower than the industry average and other rated banks, which shows the bank's ability to select good customers. Therefore, Fitch has adjusted the outlook for asset quality score from "negative" to "positive". ACB's loan-to-deposit ratio (LDR) increased to 99% by September 2024, in line with general trends in the industry, the LDR ratio as prescribed by the State Bank of Vietnam has always been low below 84%. Fitch Ratings appreciates the bank’s risk management capabilities and expects liquidity metrics to remain at a level consistent with the rating and improve over the coming year. While ACB’s Fitch Core Capitalisation ratio will decline to 12.3% by September 2024, it still maintains adequate capital buffers. ACB is expected to maintain Tier 1 capital above the average of its rated peers, thanks to improved internal capital generation. According to Fitch, in the context of Vietnam’s GDP growth rate reaching 6.8% in the first nine months of 2024, the forecast of average growth of 6.5% in the coming years will continue to facilitate ACB’s business expansion and minimize risks related to asset quality. Fitch forecasts ACB's profitability to recover by 2025 thanks to a rebound in retail lending demand, and market-dependent earnings to improve as the market stabilizes.

ACB focuses on building environmentally friendly credit policies, supporting the community and being transparent in business operations - Photo: VGP/Q.Anh

Strongly promoting ESG-oriented banking development Fitch Ratings also assessed ACB's ESG factors as neutral or low-impact, reflecting the bank's strong commitment to sustainable management of environmental, social and governance issues. ACB focuses on building environmentally friendly credit policies, supporting the community and being transparent in business operations. The bank has launched a Sustainable Finance Framework and increased the green/social credit package to VND4,000 billion to support businesses in shifting towards sustainable development. The bank continuously integrates ESG initiatives into its long-term development strategy, aiming to create lasting value for customers, shareholders and society. These efforts not only enhance ACB's position but also contribute to promoting the sustainable development of the Vietnamese economy. The fact that Fitch Ratings upgraded its outlook and maintained its credit rating at "BB-" once again affirms ACB's solid position in the Vietnamese financial market through its journey of continuing to innovate, maintain service quality and focus on sustainable financial solutions, accompanying customers in the long term. Source: https://baochinhphu.vn/fitch-ratings-nang-muc-trien-vong-tin-dung-dai-han-cua-acb-tu-on-dinh-len-tich-cuc-102241230120122876.htm