Investing.com -- Ho Chi Minh City Development JSC Bank (HDBank) experienced an upgrade in its long-term Counterparty Risk Ratings (CRR) and Counterparty Risk Assessment (CRA) by Moody’s Ratings. The adjustment, announced on May 29, 2025, saw the local and foreign currency long-term CRR and CRA improve to Ba3 from B1 and Ba3(cr) from B1(cr) respectively. This change reflects the impact of government support and a correction of an error that was made during the last rating action.

The rest of HDBank’s ratings remain the same and are not influenced by this development.

The upgrade in HDBank’s ratings is a result of a one-notch uplift due to government support. This is in line with the treatment of other Vietnamese banks that have similar ratings. The error that led to this correction was made during the last rating action when the bank’s long-term CRR and CRA were affirmed without considering the one-notch uplift due to government support.

There are several factors that could potentially lead to further upgrades or downgrades of HDBank’s ratings. An upgrade could be possible if HDBank’s standalone credit strength or Base Credit Assessment (BCA) improves. For instance, if the bank reduces its loan growth appetite, improves its tangible common equity to risk-weighted assets (TCE/RWA) ratio to more than 10%, and lessens its reliance on market funds while maintaining high-quality liquid assets as a percentage of tangible banking assets above 10%, the b2 BCA could be upgraded.

On the other hand, a downgrade could occur if HDBank’s standalone credit strength weakens. If the bank’s non-performing loan (NPL) ratio increases above 3%, leading to higher credit costs and a decrease in return on tangible assets below 0.8%, or if TCE/RWA declines below 6.3%, the b2 BCA could be downgraded. A weakening in HDBank’s funding and liquidity could also put pressure on the BCA and ratings.

Finally, a downgrade of HDBank’s long-term ratings and assessments could also occur if there is a determination that government support for the bank has diminished.

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