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Henig:  Vietnamese banks' ratings on a positive trajectory: Fitch Ratings

December, 23/2022

Stronger government support and operating environment have helped Vietnamese banks gain positive momentum, according to Fitch Ratings.

HÀ NỘI — Stronger government support and operating environment have helped Vietnamese banks gain positive momentum, according to Fitch Ratings.

In a report released this week, the rating agency said the propensity of Việt Nam's authorities to support the banking system is evident from recent regulatory actions. This led to Fitch's upgrade of most domestic banks' Long-Term Issuer Default Ratings (IDRs) in November 2022.

IDRs of three of the four rated Vietnamese banks (Vietinbank, Vietcombank, MB and ACB) are driven by Fitch Ratings' expectations of sovereign support, following the upgrade of their Government Support Ratings (GSR) in November 2022. Only ACB's rating is underpinned by its standalone credit profile, as denoted by the Viability Rating (VR).

“The State Bank of Vietnam's record of prudential supervision over the past decade and its policy response to a run on deposits at a mid-sized commercial bank in October 2022 have reinforced our view that the State has a strong propensity to support the banking system during times of stress to avert bank defaults. The IDRs of State-owned banks with high systemic importance are now equalised with the sovereign rating as a result,” Fitch said in the report.

According to Fitch, the operating environment for the banking system remains broadly supportive with revenue prospects riding on Việt Nam's strong economic performance, while asset quality, profitability and capitalisation continue to make steady progress.

“We believe that the risks of a liquidity crunch in the property sector spilling over to the banking sector are manageable, as refinancing challenges are mainly policy-driven and supply-and-demand fundamentals remain conducive over the medium term,” it said.

According to Fitch, Việt Nam's economy grew by a robust 8.8 per cent in the first nine months of 2022 and it expects the country’s GDP growth to be sustained above 6 per cent in 2023 and 2024. The favourable economic backdrop has enabled banks to take advantage of ample asset origination opportunities to expand, while rising household incomes and improved business cash flow keep credit risks in check.

“The outlook on the operating environment score is positive and may be upgraded in the next 12-18 months should Việt Nam's economic momentum be sustained,” it noted.

Key performance indicators in the banking system have continued to improve. Loan growth in the first nine months of 2022 accelerated to 17 per cent, and the SBV announced in December that the 14 per cent system credit growth limit for 2022 may be increased by 1.5-2.0 percentage points. The system's reported non-performing loan (NPL) ratio was steady at 1.5 per cent as of the first half of 2022, pushing credit costs lower year-on-year and raising return on equity in the system to nearly 20 per cent on an annualised basis. Capitalisation improved, although only modestly, as much of the generated capital was expended to sustain rapid balance-sheet growth. Fitch expects these trends to hold up in the near term, which would strengthen the case for a more favourable operating environment assessment.

Fitch said problem loan ratios remained steady in the first three quarters of 2022 despite the expiry of COVID-19 loan classification forbearance in June 2022.

“We see limited spill-over risks from the remaining restructured loans in the banks' books, as all of the rated banks have fully provisioned for these loans, ahead of the regulatory deadline of end-2023. The higher-interest-rate environment is likely to weigh on borrowers' debt servicing capacity, but we expect any weakening in loan quality to be manageable amid the resilient economic momentum. Moreover, about 60 per cent-70 per cent of the rated entities' loans have a tenor of less than five years, with the majority being under one year. The relatively short loan lives suggest that the 200 basis points increase in interest rates would not have increased gross repayment amounts materially,” Fitch said.

Reserves against NPLs at the banks remained adequate at around 137-402 per cent as of September 2022, with Vietcombank maintaining the highest coverage ratio. Fitch believes this reflects the bank's more conservative provisioning policy. The rating agency expects its loan-loss coverage to decline as uncertainty surrounding the pandemic recedes, although all of the banks have said that they intend to maintain coverage above 100 per cent over the next 12-18 months to safeguard against future asset-quality weakness.

“The rated banks' direct exposures to real-estate developers are moderate and are usually secured. However, the banks remain vulnerable to swings in property prices, since real-estate assets form a significant portion of loan collateral. We do not expect property prices to plummet in the near term in light of the resilient demand,” Fitch said. — VNS      LINK

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Henig:  Bách Hóa Xanh partners with MoMo to promote cashless payment in retail sector

December, 23/2022

Bách Hóa Xanh (a member of Mobile World Group) and MoMo have announced a strategic cooperation that turns the later into the first e-wallet to be accepted as a payment method at Bách Hóa Xanh stores.

HCM CITY — Bách Hóa Xanh (a member of Mobile World Group) and MoMo have announced a strategic cooperation that turns the later into the first e-wallet to be accepted as a payment method at Bách Hóa Xanh stores.

This means, besides payment by cash and card, customers can now make payments using MoMo when shopping at more than 500 Bách Hóa Xanh stores in HCM City. This payment method will soon expand to all Bách Hóa Xanh stores nationwide.

Previously, MoMo was one of the payment methods available on Bách Hóa Xanh's online shopping channel. The new move marks a comprehensive cooperation between the two sides from online to offline to increase customer experience and convenience in modern retail, and promote cashless payment.

“MoMo is delighted to be the first e-wallet accepted as a payment method at Bách Hóa Xanh stores, bringing consumers a convenient and easy shopping experience, especially during the approaching Lunar New Year,” said Nguyễn Linh Trang, director of the Payment and Daily Service Centre of MoMo.

MoMo will continue to be a reliable strategic partner of retailers and businesses to contribute to promoting Việt Nam's digital economy, she said.

“The cashless payment trend is contributing to improving customer experience and optimising business operations, especially in the retail sector. Comprehensive cooperation with MoMo super app from online to offline helps Bách Hóa Xanh to catch up with the cashless payment trend in the fastest way, while reaching more customers through MoMo’s diverse ecosystem of more than 31 million users," said Trương Hồng Hoàng, multicat business unit director at Bách Hóa Xanh.

To make the partnership, from now until December 31, 2022, all users who choose to pay with MoMo at Bách Hóa Xanh stores in HCM City will receive a 50 per cent discount (maximum of VNĐ30,000) for any bill.

In particular, users can choose to pay with postpaid wallet, a ‘buy now, pay later” feature on MoMo. — VNS   LINK

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Henig:  Trade promotion helps export growth

06:00 | 23/12/2022

(VEN) - Trade promotion has significantly contributed to Vietnam’s export achievements. Vietnam Economic News’ Viet Nga spoke with Vu Ba Phu, Head of the Ministry of Industry and Trade’s Vietnam Trade Promotion Agency (VIETRADE) about the agency’s work.

Could you tell us about VIETRADE’s trade promotion work in 2022?

VIETRADE has helped enterprises identify market trends, learn about new regulations and policies in foreign markets, and promote Vietnamese brands and products through trade fairs and exhibitions, including Anuga in Germany, Sial in Paris (France), and BioFach (Germany), among others.

The agency worked with Vietnamese trade offices in different countries to open Vietnamese goods showrooms, and frequently held supply-demand connection meetings between Vietnamese exporters and foreign importers.

Trade promotion has helped many Vietnamese businesses develop professional branding and improve their image. They have also helped Vietnamese enterprises recover and develop production, promote exports and improve the competitiveness of their products, increase sales, and connect local suppliers with distributors, processors and exporters.

Could you tell us about VIETRADE’s monthly meetings with overseas trade offices?

Since July 2022, VIETRADE has held monthly online meetings with Vietnamese trade offices in foreign countries to update them on the export and import needs of localities and sectors, and provide information about the latest policies and market opportunities.

The meetings connect trade promotion agencies and other organizations and enterprises in Vietnam with Vietnamese trade offices and business associations overseas to implement the 13th-tenure Central Party Committee’s target of boosting trade promotion, expanding and diversifying export markets, products and supply chains, and reaching a sustainable trade surplus.

Could you point to the strengths and weaknesses of Vietnamese enterprises in product and export promotion?

Vietnamese enterprises have become increasingly large-scale and competitive. They are capable of international economic integration and participating in global supply chains, relatively agile in digitalization, and take the initiative in information technology application.

However, many businesses remain passive in market, policy and partner information search and coordination with trade promotion organizations to prepare and implement trade promotion plans, especially for FTA markets. Many enterprises lack human resources with foreign language competence and skills of trade promotion negotiations and knowledge of modern consumption trends and applying information technology for trade (including export) promotion.

Many businesses have not paid due attention to product development and quality and competitiveness improvement to meet import markets’ regulations on quality, food hygiene and safety, traceability and non-tariff technical barriers.

What should businesses do to increase exports and expand markets?

In order to strengthen exports, expand markets and keep pace with continuous changes in world consumption trends, businesses need to pay attention to intellectual property right registration and protection for their products in foreign markets, implement regular product research and development, connect with foreign distributors, attract foreign investment in the production of goods for export to overseas distribution systems, improve production technology and equipment, and diversify products and product designs to meet not only the tastes of foreign customers but also technical standards and regulations of import markets. One of the most important things is medium and long-term investment in branding development abroad to add value to both enterprises and their products.

Viet Nga   LINK

Henig:  Oil stocks with strong financial health good choices for investors

December, 22/2022

Oil businesses with strong financial health benefitting from the current high oil prices will be the appropriate choices for investors’ portfolio in the current volatile market context.

HÀ NỘI Oil businesses with strong financial health benefitting from the current high oil prices will be the appropriate choices for investors’ portfolios in the current volatile market context.

The stock market ended last week with three increasing sessions and two decreasing sessions. The main movement of the VN-Index in the past week was a struggle, industry groups took turns leading and controlling the index with three prominent names of securities, banking and steel.

In the past month, many oil and gas stocks recorded an increase of more than double digits such as Nam Sông Hậu Oil and Gas Investment Company (NSH) gaining 45.5 per cent, Petrovietnam Transportation Corporation (PVT) rising 46.2 per cent, PetroVietnam Power Land (PVP) climbing 46 per cent and Bình Sơn Refinery (BSR) rising 34.2 per cent.

Positive stock price movements often reflect the sector's outlook and investor confidence in the businesses.

Mixed performances among oil and gas groups

With the ongoing tensions between Russia and Ukraine, the price of Brent crude oil was pushed to a record high since 2008 of $139.13 a barrel in March. Brent oil price cooled down gradually towards the end of 2022 but remained at the highest level in the past eight years, at over $90 per barrel.

Oil and gas enterprises are divided into three types: Upstream (including all activities of prospecting, exploration and exploitation); midstream (transportation, storage and distribution of oil and gas); downstream (converting oil and gas into finished products, delivering to customers). Therefore, the impact of an increase in oil prices on each of these groups is different.

Despite the sharp increase in oil prices in 2022, the upstream group including Vietnam Petroleum Technical Services Corporation (PVS) and PetroVietnam Drilling and Drilling Services Corporation (PVD) recorded poor business results.

PVD recorded a loss of VNĐ51 billion in the third quarter of 2022; thereby increasing the loss in nine months of 2022 to VNĐ201.66 billion. PVS in the third quarter of 2022 recorded a profit of VNĐ193 billion, down nearly 20 per cent compared to the same period last year; PVS' 9-month profit in 2022 also decreased by 21.2 per cent to VNĐ453.6 billion.

This year is considered a challenging year for the "downstream" group due to the instability of the domestic market. Nghi Sơn oil refinery, the largest oil project in the country, operated below capacity in the first half of this year and the delay in adjusting the costs of the base price of oil has caused many difficulties for distributors, causing a shortage of domestic supply. Therefore, some large distributors have to increase the source of imported goods to ensure petrol for the domestic market in the context of unfavourable developments in the world oil market and high transportation costs.

In Q3, PV Oil (OIL) lost VNĐ373.4 billion; Materials - Petroleum Joint Stock Company (COM) lost VNĐ7.7 billion; Thanh Lễ General Import-Export Trading Corporation (TLP) lost VNĐ168 billion; Nam Sông Hậu Oil and Gas Investment Company (NSH)'s profit was VNĐ762 million, down by nearly 82 per cent, Bình Sơn Refinery (BSR)'s profit was VNĐ455 billion, equivalent to a slight decrease of 3.32 per cent.

In the first nine months of 2022, no “downstream” enterprises recorded a growth in profit over the same period last year, except for BSR, which made a profit of nearly VNĐ13 trillion, nearly three times higher.

The midstream group is much more promising. Besides PetroVietnam Drilling and Well Services Corporation (PVD) with profit down 49 per cent, the rest of the companies all announced good business results, such as PetroVietnam Gas JSC (GAS) earning profit of VNĐ3.09 trillion, up 25.42 per cent; Petrovietnam Transportation Corporation (PVT) collecting VNĐ386 billion, up 152.3 per cent and PetroVietnam Power Land JSC (PVP) earning VNĐ176.3 billion, up 371.4 per cent.

VnDirect Securities Co expects the average brent oil price to reach about $90 per barrel in 2023.

For the upstream group, VnDirect expects the revised Petroleum Law passed in November will be a general legal framework for the oil industry, reducing the overlap between laws in oil and gas activities, helping to create a transparent legal framework for investors and increasing the attractiveness of the investment environment in the oil and gas sector.

As for the midstream, VnDirect sees the demand for oil and gas transportation in the domestic market will gradually increase in the next few years thanks to the operation of Bình Sơn Refinery and Nghi Sơn Refinery at full capacity. Besides, charter rates have recovered to pre-COVID-19 levels since 2022, which is a good sign for oil and gas carriers.

As for the downstream group especially large enterprises, VnDirect expects world oil prices to see more stable movements compared to 2022; Việt Nam's petrol consumption demand is forecast to reach a compound growth rate of 5.5 per cent in the 2022-2030 period, which is the basis for distribution businesses to grow in the coming years. VNS    LINK

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Henig:  MPI releases 2021's sustainable development index, Đà Nẵng tops the chart

December, 23/2022 

The Academy of Policy and Development (APD), under the Ministry of Planning and Investment (MPI)  released the 2021 Provincial Sustainable Development Index (PSDI) for cities and provinces across the country on Wednesday, as well as a number of recommendations to help them stay on-course in the coming years.

HÀ NỘI — The Academy of Policy and Development (APD), under the Ministry of Planning and Investment (MPI) released the 2021 Provincial Sustainable Development Index (PSDI) for cities and provinces across the country on Wednesday, as well as a number of recommendations to help them stay on-course in the coming years.

The country's average PSDI for the year 2021 was 51.38 points, a reflection of a difficult year when localities struggled to deal with a global pandemic and post-pandemic social and economic recovery.

The academy urged local governments to step up efforts in the implementation of the country's 2030 vision for sustainable development.

The central city of Đà Nẵng continued to top the index this time with 65.28 points, followed by northern port city Hải Phòng with 64.09 and Quảng Ninh, another northern coastal town, with 63.10 points.

The capital city Hà Nội with 62.46 and emerging northern industrial hub Hưng Yên Province with 62.43 points showed some remarkable improvement compared to the 2020's index.

The vast majority of bottom-ranking localities were located in remote and isolated regions of the country, which trailed far behind in development in comparison to the country's large urban centres in the Red River Delta and the Mekong Delta.

Hà Nam Province and Bình Dương Province were other up-and-comers this year thanks to multiple large industrial investments.

At an event announcing the 2021 index, policymakers, economists and scientists discussed measures to help the country stay on course with its sustainable development goals (SDGs), as well as to review the implementation of SDGs on both central and local government levels.

A total of 17 SDGs have been included in a National Action Plan until 2030 which translated into 115 objectives that are suitable to Việt Nam's historic, geographic and demographic conditions.

Development experts said the implementation of the SDGs has played a key part in setting up the foundation for the country's next phase of development.

Dr Trần Trọng Nguyên, APD's director, however, said there is a need to build a more detailed plan for SDGs implementation at the local government level, which integrates SDGs into local socio-economic long-term development strategy.

An important milestone has been reached in the country's effort to eliminate multidimensional poverty, from 9.2 per cent in 2016 to 3.36 per cent in 2022.

''Some of our key objectives are to eliminate hunger, ensure food security, bolster exports, especially of agroforestry products and develop a sustainable agriculture sector," said economist Lê Việt Anh.

Other important objectives include improvements to gender quality, public services and the fight against violence against children. VNS    LINK