Nam A Bank to enjoy improved capital and profitability through 2026

Asset quality pressures are expected to moderate over the next 12-18 months.

Vietnam’s Nam A Bank is expected to enjoy a stable asset quality and improving capital and profitability over the next 12-18 months, according to Moody’s Ratings.

The Viet bank’s problem loan ratio— including non-performing loans (NPLs) and gross Vietnam Asset Management Company (VAMC) bonds— remains “stable” at 2.3% in 2024 compared to 2.1% a year earlier, the ratings agency said in its latest deposit rating report of the bank, where it affirmed Nam A Bank’s B2 deposit rating.

The bank should also enjoy “moderate” probability of support from the Government of Vietnam (Ba2 stable) for the bank when needed.

“We expect asset quality pressures to moderate over the next 12-18 months as the bank slowed annual loan growth to 19% in 2024, in line with the industry average, from the peak of 35% in 2020,” Moody’s Ratings said.

The bank's capitalization will improve slightly over the next 12-18 months due to slower loan growth.

The bank's return on tangible assets increased to 1.5% in 2024 from 1.3% in 2023 as the bank optimized funding costs and operating expenses.

“Nevertheless, further improvement to ROTA over the next 12-18 months will be limited due to higher funding costs as the bank aims to accelerate its deposit growth,” Moody’s said.

However, Nam A Bank's funding profile is constrained by its small deposit franchise.