It revised the outlook for Vietcombank, Vietinbank and ANZ Bank (Vietnam) from "positive" to "stable," and for the ACB and MB from "stable" to "negative."

The revision follows the blows taken by Vietnam’s economy from the pandemic, with a decade-low growth of 3.8 percent in the first quarter, and the State Bank of Vietnam having to cut its policy rates and directing banks to extend debt relief to affected borrowers.

The banking sector therefore has to bear the policy burden of financial relief. As Vietnam’s economy loses its growth momentum, banks’ asset quality and earnings will be affected.

Fitch expects profitability to come under "significant pressure" due to waning credit demand and lower lending rates. Lower fees mean banks will have lower earnings.

It also assessed Vietinbank’s capitalization outlook as "negative" as the bank has not fulfilled the Basel II capital adequacy ratio, an international business standard.

Fitch Ratings forecasts Vietnam’s GDP growth to hit 3.3 percent this year, while the International Monetary Fund (IMF) has projected 2.7 percent. Both are the lowest growth rates recorded since Vietnam introduced its economic reforms in the 1986.

Last year GDP growth was 7.02 percent, the second highest in a decade behind the 7.08 percent in 2018.