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RETAIL BANKING | Cesar Tordesillas, Vietnam

S&P assigns stable outlook for Sacombank

Standard & Poor’s assigned its ‘B+’ long-term and ‘B’ short-term counterparty credit ratings to Sacombank.


The outlook on the long-term rating is stable.

According to S&P, Sacombank has a “strong” business position, “weak” capital and earnings, “adequate” risk position, “above-average” funding, and “adequate” liquidity.

The bank’s stand-alone credit profile was assessed to be ‘b+’.

The stable outlook reflects S&P's view that Sacombank will maintain its financial profile amid challenging conditions and high inflation.

"The bank has an established franchise in the consumer and small and midsize enterprise segments. We consider Sacombank’s management to be progressive, with a focused retail strategy. We assess Sacombank’s diversity to be generally adequate; like most of its peers, it is domestically focused and the bulk of its revenues come from lending," says S&P.

S&P believs Sacombank will moderate loans growth and attempt to grow fee income by cross-selling to existing customers.

It expect the bank’s risk-adjusted capital ratio before diversification adjustments to remain about 4% in the next 12-18 months.

“The stable outlook reflects our expectation that Sacombank will maintain its financial profile amid challenging conditions and high inflation in Vietnam,” said Mr. Tan. “We believe the bank management will temper loans growth with prudent risk management," S&P added.

S&P says it could upgrade Sacombank if it sustainably improves its profitability and capitalization, such that they are notably better than in 2010. Continuous improvements in the bank’s risk management and operating processes so that they are in line with international best practices could also trigger an upgrade.

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