Hanoi, 21 May 2024 - Vietnam Investors Service (VIS Rating) has assigned a long-term issuer rating of AA- to Tien Phong Commercial Joint Stock Bank (TPBank). The outlook on TPBank’s AA- issuer rating is stable. This is the first-time VIS Rating assigned rating to TPBank.
RATING RATIONALE
TPBank’s AA- long-term issuer rating reflects its above-average standalone assessment and our expectation of a moderate likelihood of government support for the bank during extraordinary circumstances. The bank’s standalone assessment incorporates its strong funding structure, strong profitability, above-average capital, coupled with its average asset risk and liquid resources compared to its peers.
Factors that could lead to an upgrade of the rating
TPBank’s AA- rating could be upgraded if the bank exhibits a significant improvement in its asset quality and loss absorption buffer, for example by establishing a track record of maintaining (1) its problem loan ratio at below 1% on a sustained basis, and (2) its TCE as percentage of RWA above 14.5%.
Factors that could lead to a downgrade of the rating
TPBank’s AA- rating could be downgraded if (1) there is material deterioration in its asset quality through continued increases in either the formation rate of new problem loans or credit concentration in high-risk segments and/or large borrowers; or (2) the bank’s loss absorption capacity weakens substantially, for example its TCE/ RWA falls below 10% or its ROAA falls below 1%; or (3) we view the bank’s vulnerability to liquidity risks increases through further increases in reliance on short-term market funds and insufficient liquid assets to serve as a liquidity buffer.
SUMMARY OF KEY FACTORS
Source: Vietnam Investors Service
Note: EW- Extremely Weak, VW- Very Weak, W- Weak, BA- Below-Average, AV- Average, AA- Above-Average, S- Strong, VS- Very Strong
RATING METHODOLOGY
Rating Methodology: Financial Institutions, published in September 2023.
For detailed information, please see our full methodologies at: https://visrating.com/our-policies/phuong-phap-xep-hang-tin-nhiem-to-chuc-tai-chinh.13.html
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