Fitch: Stress on Vietnam banks

Fitch Ratings said in a new report that in the immediate future, Vietnam banks face a challenging environment due to higher interest rates and tighter liquidity, as recently imposed by the country's central bank, State Bank of Vietnam, to combat the sharp increase in inflation.

The higher interest rate environment is likely to result in borrower stress and higher credit costs, Fitch said. Private banks are most exposed given their rapid loan growth over recent years to property developers and stock market investors, the agency added.

Beyond these immediate concerns, Vietnam's banking sector should continue in the medium- to long-term to offer good opportunities to its more commercially-oriented prudent operators due to ongoing robust economic growth, Fitch said.

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