International credit rating agency Fitch Ratings has just announced the upgrade of ACB's long-term foreign currency credit outlook (Long-Term Issuer Default Rating - IDR) from 'Stable' to 'Positive', while maintaining the rating 'BB-'.
Fitch also maintained ACB's Viability Rating (VR) at "bb-", Government Support Rating (GSR) at "bb-", and for the first time issued a long-term local currency IDR at "BB-" with a "Positive" outlook.
According to the latest assessment report from Fitch Ratings, ACB has achieved a number of factors that prompted this organization to adjust the rating in its assessment of sustainable and long-term development prospects such as improved credit capacity, a right 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 affirmed ACB's Long-Term IDR based on its VR rating, reflecting the bank's ability to manage its credit risk independently. The "Positive" outlook reflects expectations of improved asset quality over the next 12-18 months, supported by a favorable economic environment and 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 mobilization among the ranked domestic private banks, accounting for 65% and 80% respectively. This is the highest proportion among the ranked domestic private banks and is one of the important factors helping the bank continue to maintain stable growth. Fitch pointed 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 enterprises 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 revised the outlook on the 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 at below 84%. Fitch Ratings highly appreciates the bank's risk management capacity and expects liquidity indicators to remain at a level consistent with the rating to improve over the coming year.
While ACB’s Fitch Core Capitalisation Tier 1 capital adequacy ratio will decline to 12.3% by September 2024, it will still maintain 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 9 months of 2024, the forecast of average growth of 6.5% in the coming years will continue to create favorable conditions for ACB to expand its business operations and minimize risks related to asset quality. Fitch forecasts ACB's profitability to recover in 2025 due to increased demand for retail loans, and market-dependent income will improve as the market develops stably.
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 its 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 upgrade of the outlook and maintenance of the credit rating at "BB-" by Fitch Ratings 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.
Read more about Fitch Ratings' assessment here .
| ACB is always considered a comprehensive bank when it is in the Top 10 banks in all important business and management criteria. Currently, ACB has the 3rd highest return on equity (ROE) in the system for the last 4 quarters. The bank is also in the Top 5 for the highest ROA, Top 5 banks with the lowest bad debt/loan ratio. |
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