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Moody’s affirms SHB’s B1 ratings amid volatile market


On April 19, the international credit rating agency Moody’s Investors Service (Moody’s) announced an update on Saigon – Hanoi Commercial Joint Stock Bank’s (SHB) rating. Moody’s maintains the B1 rating for SHB as the global market has been characterized by wide fluctuations and huge challenges in 2022 and early 2023.

Specifically, Moody’s maintains the B1 rating for the long-term issuer and local currency deposit (LC) category for SHB, along with other ratings.

“The affirmation of SHB’s B1 rating and b2 BCA reflects Moody’s expectation that the bank’s credit profile will remain stable over the next 12 to 18 months. The b2 BCA also considers the bank’s capital and liquidity,” Moody’s wrote.

Commenting on the above update, a representative of SHB’s executive officers said that: “Moody’s updated review has reflected the challenges in both domestic and foreign markets, as well as fluctuations and challenges for the banking industry in particular. In that context, Moody’s maintaining the B1 rating proves that SHB continues to strengthen the operational safety and efficiency to realize sustainable development goals. SHB believes that its internal strength will allow the Bank to keep improving operational safety and efficiency as well as adopt higher international standards in the coming time”.

Business results in 2022 of SHB guarantee its position in top Vietnam’s commercial banks. Return on equity (ROE) ratio equals 24.7 and cost-to-income (CIR) ratio reaching 22.7% – ranking the second best in the whole banking system. SHB’s safety, liquidity, and risk management indicators all exceed those set by the State Bank of Vietnam and international standards.

The representative of SHB’s executive officers also stated that the Bank has well prepared to adopt Foundation Internal Rating based approach (FIRB) and comply with International Financial Reporting standards (IFRS) to satisfy Basel III standards on liquidity risk – one of the key criteria Moody’s evaluates banks’ operational safety and risk management.

At the 31st Annual General Meeting of Shareholders  held on April 11, business objectives in 2023 such as total assets equal about VND 600,000 billion; profit before tax over 10,200 billion dong and capital adequacy ratio (CAR) above 12% in line with Basel II standards have been approved.

In particular, the approved plan to pay dividend equivalent to 18% in shares is expected to raise the charter capital to over VND 36,600 billion in the course of achieving above VND 40,000 billion in the next phase. SHB sets the goal of controlling non-performing loan (NPL) ratio in 2023 below 2%.  Those factors shall be further improved to serve as the basis for Moody’s considerations in the next review.

At the recent Annual General Meeting of Shareholders, the management reported major business results in the first quarter of 2023. Profit before tax of SHB in the first quarter has amounted to more than VND 3,500 billion, rising about 10.3% year-on-year and achieving about 35% of the profit objective in 2023.

By the end of the first quarter of 2023, SHB’s total loan outstanding reached approximately VND 423 trillion, customer deposits around 440 trillion VND and total assets nearly 571.5 trillion dong. These metrics affirm SHB’s position in the Top 5 largest commercial joint stock banks in Vietnam in terms of capital and total assets.

Previously, in May 2022, Moody’s upgraded SHB’s rating with a positive outlook, based on the foundational factors SHB has successfully built and implemented in 2021, and assessment of its business plan in 2022 and SHB growth strategy in the next 3-5 years. Accordingly, Moody’s upgraded SHB’s long-term deposit and issuer rating from B2 to B1, Baseline Credit Assessment (BCA) from B3 to B2, and changed the outlook from stable to positive.