BizLIVE - Moody's Investors Service (Moody's) has just announced that it has confirmed HDBank's Long-term Deposit Rating in local and foreign currencies and the Issuer Rating of HDBank at B1, and upgraded HDBank's outlook from “Stable” to “Positive”.
Moody's Upgrades HDBank's Credit Outlook from Stable to Positive
According to Moody's, this result is based on the assessment that HDBank's Baseline Credit Assessment (BCA) can be upgraded in the next 12-18 months thanks to the improvement of asset quality in recent years, helping to reduce contingency costs. On the other hand, profitability will be improved thanks to better yields from lending to individuals and SMEs, while capital capacity will continue to trend stably thanks to sufficient internal capital to meet growth in total assets. These factors will help optimize operational efficiency and profitability for the bank.
In the challenging period due to the outbreak of the Covid-19 pandemic, which caused Moody's to consider lowering the credit rating of some organizations, the fact that HDBank's credit rating was maintained stably throughout 2020 has affirmed the bank’s internal capability in adapting to maintain stability and make steady progress in accordance with its development strategy even in difficult times.
This is, again, reflected in HDBank's business results in the first quarter of 2021 when the consolidated pre-tax profit reached over VND 2,100 billion, an increase of 68% compared to the first quarter of 2020. Notably, the parent bank's pre-tax profit exceeded VND 1,800 billion, an increase of 88% over the same period last year. The target return on equity (ROE) and return on total assets (ROA) reached 26.3% and 2.1% respectively.
Capital adequacy ratio (CAR) reached over 12% as asset quality and liquidity remained high. The ratio of short-term capital to medium-long-term loans is at only 23.4% compared to 40% cap according to regulations. Cost effectiveness continued to be optimized with cost/total income ratio (CIR) of only 39.1% compared to 51% in the same period last year.
Contributing to the economy and accompanying customers in challenging circumstances, in addition to ensuring safe and stable business operations, HDBank has spent tens of billions VND to support the community and accompany customers in credit programs worth tens of thousands of billion VND to overcome Covid-19.
Previously, based on positive assessments of Vietnam's economic achievements, achievements in effective prevention and control of the Covid-19 pandemic in 2020 and the national outlook for growth in the coming time, Moody's has maintained the national credit rating of Vietnam at Ba3 and upgraded the outlook from “Negative” to "Positive". Currently, Vietnam is the only country in the world where all three credit rating agencies (including Moody's, S&P and Fitch) have simultaneously upgraded the country's credit outlook to "Positive".