Covid-19 may weigh on Vietnam banks’ performance: Fitch Ratings Fitch Rating keeps the positive rating outlook for Vietnamese banks. The Covid-19 outbreak will hit Southeast Asian banking sectors through weaker economic growth, slower credit growth and dampened profitability, and Vietnam’s banking industry will also take a hit, Fitch Ratings has said in a note. In Vietnam, reduced tourism, disrupted manufacturing supply chains and weaker external demand are likely to put pressure on corporate profitability, and may weigh on banks’ asset quality, although tourism-related sectors are only a small part of Fitch-rated banks’ credit portfolios. “Banks are likely to face slower credit and profit growth rather than take heavy hits to asset quality. However, Vietnam banks have very limited capital to buffer against prolonged weakening in profitability, or to stimulate credit growth if directed by the government.” An economic slowdown would also test the quality of the newly extended consumer loans, the rating agency added. The rating outlook for Vietnamese banks is positive, in line with that of the sovereign (BB/Positive), although upward sovereign rating momentum could be affected by an extended outbreak. Fitch Ratings said that banks in tourism-dependent Thailand and China-exposed Singapore likely to be the most affected by… Read full this story
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