FiinRatings has announced credit rating of Asia Commercial Joint Stock Bank (ACB) at 'AA+'

FiinRatings is pleased to announce the Long-Term Credit Rating results for the Initial Issuer Rating of Asia Commercial Joint Stock Bank ("ACB" or "the Bank") at 'AA+' with a 'Stable' outlook. This is the first time a Vietnamese enterprise has been rated at 'AA+' by a domestic credit rating agency. 

Hanoi, September 10, 2024 

FiinRatings is pleased to announce the Long-Term Credit Rating results for the Initial Issuer Rating of Asia Commercial Joint Stock Bank ("ACB" or "the Bank") at 'AA+' with a 'Stable' outlook. This is the first time a Vietnamese enterprise has been rated at 'AA+' by a domestic credit rating agency. 

ACB's 'AA+' Issuer Credit Rating ("ICR") with a 'Stable' rating outlook reflects FiinRatings' opinion that the Bank's credit profile will remain stable over the next 24 months, supported by its solid business position, stable capital profile, and relatively good profitability. Additionally, the Bank's funding abilities and liquidity position are also expected to continue to benefit from the increase in stable funding sources, which will facilitate credit growth and liquidity stability. 

FiinRatings has assigned an anchor of 'a-' for the Vietnamese banking sector, reflecting our assessment of the risks posed by the macroeconomic environment and industry-specific risks faced by banks operating in Vietnam. The basis for ACB’s Issuer Credit Rating is summarized as follows: 

• The ‘Strong’ business position reflects ACB’s solid position among the leading private joint-stock commercial banks in Vietnam and its leading position in the retail banking sector, with a diversified business model and high stability, supported by the prudent development strategy and management. As of 2Q2024, ACB is one of the largest commercial banks in Vietnam, ranking 8th and 7th in terms of outstanding gross loans (VND 550.2 trillion) and customer deposits (VND 511.7 trillion) respectively, among 30 Vietnamese commercial banks.. 

• FiinRatings believes that ACB’s strong capital structure is one of the Bank’s key credit strengths, supported by good profitability on a relatively stable capital base. ACB’s capital structure is assessed as “Adequate”, based on a higher capital adequacy ratio (CAR) compared to the industry median, an increase in Tier 1 capital, and recent efforts to improve financial leverage. 

• ACB’s profitability is assessed as ‘Strong’, displayed by the Bank’s superior profitability indicators such as NIM, and ROA; this is supported by strategy targeting high-margin customers and effective cost management. 

• FiinRatings assesses ACB’s risk position as “Very strong” and therefore upgrades its rating by two notches. This reflects the Bank’s prudent risk appetite, demonstrated by (i) more cautious lending and investment policies compared to its peers, (ii) a target retail customer base with relatively low concentration risk, (iii) a credit growth strategy that emphasizes asset quality, and (iv) high recovery rates while maintaining low NPL ratios compared to other banks with similar retail lending models. 

• ACB's funding and liquidity position is rated ‘Strong’ due to the Bank's diversified capital structure and its focus on more stable funding sources compared to the industry average. ACB is expected to maintain a high level of stable funding by leveraging its leading position as a retail bank with a high-quality and stable customer base, thereby strengthening its liquidity and meeting future funding needs. 

Overall, FiinRatings evaluates ACB’s funding and liquidity position as “Strong” compared to the industry average, demonstrated by its ability to diversify funding base and strengthen stable funding sources. This has helped stabilized liquidity and reinforced ACB’s leading position among private JSCBs in Vietnam. Additionally, the Bank’s liquidity management is expected to remain strong despite rising pressures from NPLs in its retail lending portfolio and the slow economic recovery forecasted in 2024. Key elements such as ACB's funding structure, diversification strategy to reduce reliance on wholesale funding, and its ability to raise liquidity under stressed conditions are factors that we will continue to monitor and update in ACB’s credit profile. 

Please access HERE for our detailed Public Announcement on the rating.  

Other rating publications by FiinRatings can be accessed at: https://fiinratings.vn/RatingDetail/2092/en   

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