...Support-Driven Ratings: The ratings of Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), majority owned by Vietnam (BB-/Stable), are a notch below that of the sovereign. This reflects Fitch Ratings' view that the state's ability to provide timely support to the bank is constrained by its weak finances and the large size of the banking system relative to the GDP. Still, Vietnam's propensity to back the nation's largest bank is very strong given its systemic importance, quasi-policy functions and strong domestic franchise. Asset-Quality Risk Remains: Fitch believes Vietinbank's reported NPL ratio of 1.45% at end- June 2015. Its overall problem loans will reach 3.6% of gross loans after sales to Vietnam Asset Management Company and "special mention" loans are added to the reported NPLs. This is lower than that of its peers and may not reflect its underlying asset quality, underlining capital impairment risks in the event of a significant spike in credit costs. Vietinbank's...
