...Fitch Ratings expects Vietnam banks' profits to remain supported by rapid retail lending growth, buoyed by rising income and a supportive property market. However, the positive momentum could be dampened as the COVID-19 outbreak continues to evolve and takes a toll on the economy. Data has shown early signs of reduced external demand and lower tourist arrivals, with anecdotal reports of disruptions in manufacturing supply chains. The banks' low loss-absorption buffers leave them vulnerable to economic shocks amid a longer-than-expected outbreak. Asset Quality Buttressed by Economy: The State Bank of Vietnam has ordered banks to provide a reprieve to borrowers affected by COVID-19 through lower borrowing rates and deferred interest payments. We understand the banks are not required to classify such accounts as non- performing loans (NPLs). This would temper increases in reported impairments. We believe the under-reporting of NPLs remains an issue, but the problem is more limited for most...
