Accordingly, Fitch Ratings has rated the credit rating of Nam A Bank's Long-term Issuer Default Rating (IDR) at "B+" with a stable outlook.
If comparing this rating result of Fitch Ratings, it will be similar to Moody's B1 level (one level higher than Moody's most recent assessment of Nam A Bank being B2).
In addition, Fitch Ratings also announced the results of two other important components for Nam A Bank: Operating capacity - financial health (Viability Rating - VR) at "b+"; Government Support Rating (GSR) at "b+".
According to Fitch Ratings, the main factors leading to this rating result are: Results of rating Vietnam's operational capacity - financial health (VR), strong economic growth results of Vietnam, network and scale, asset quality, profit, equity, mobilized capital, and support capacity of the Government (GSR).
Specifically, Vietnam will achieve a GDP growth rate of 7.1% in 2024, and is expected to maintain over 7% in the medium term, creating favorable conditions for the banking system in general and Nam A Bank in particular to develop. Nam A Bank has taken advantage of the improvement in market liquidity, helping deposit costs to decrease significantly in 2024, thereby expanding the net profit margin (NIM) and boosting revenue.
It is expected that the operating profit ratio on risk-averse assets (RWA) will continue to increase in the next 2 years, thanks to stable control of credit costs. Nam A Bank's Fitch (FCC) core capital ratio will increase to 7.7% by the end of 2024 (compared to 6.9% in 2023).
Fitch Ratings assessed Nam A Bank's capitalization outlook as positive, with the forecast that the FCC rate will continue to increase in the next 2 years, thanks to the policy of dividing dividends in stocks and maintaining profits for reinvestment.
The quality of the bank's assets tends to improve, with the non-performing loan ratio (NPL) increasing slightly to 2.3% by the end of 2024 (compared to 2.1% at the end of 2023), but still at the industry average. The economic recovery, especially in the export and real estate sectors, will help improve the solvency of small and medium-sized enterprise (SME) customers.
Although it only accounts for 1% of the market share of banking assets, Nam A Bank has a great advantage in the SME customer segment. Fitch Ratings recognizes Nam A Bank's efforts in expanding controlled credit for SME. This is also a sector that contributes significantly to Vietnam's economic growth.
According to Fitch Ratings, Nam A Bank's credit rating may increase if in the future the bank's financial results improve significantly, as shown through the following main indicators: NPL ratio = 10%, bank deposit market share >=3%.
Meanwhile, the goal that Nam A Bank sets for the coming years is to both increase scale (target of achieving a deposit market share >=3% and being in the group of 15 strongest joint stock commercial banks in Vietnam) and ensure sustainable financial quality (ROE >20%, NIM >= 3.5%, NPL =10%, ...). This will create momentum for Nam A Bank to improve its rating results in the future because it meets most of the ratings of Fitch Ratings.
