Despite the good performance of banks was reported, a drop in the main stock market and the freeze in the informal market pushed prices of bank shares to fall sharply. Compared with this month early, the current share price of EAB fell by 1.6 million dong per share to 10 million dong, The Military Bank down 1.7 million to 8.7 million dong each, Vietnam Eximbank down 1.4 million dong to nine million dong per share, An Binh Bank dropping by 50,000 dong to 620,000 dong, Orient Commercial Bank down 300,000 dong to 8.5 million dong per share.
Shares of Saigon Thuong Tin Commercial Bank (Sacombank) and Asia Commercial Bank (ACB) were no exception although previously, these banks released good business results for the first quarter of 2007. Typically, ACB reported gaining 770 billion dong in pre-tax profit, Sacombank 530 billion dong, Eximbank 264 billion dong, EAB 150 billion dong and OCB earned 91 billion dong.
The general director of a joint stock bank assessed, a sharp reduction in bank shares on both of formal and informal stock markets was for the reason that a lot of investors felt hesitant when investing in bank shares due to a series of warnings on highly potential risks in the informal stock market was released, which lowered transparency of bank shares.
Notably, share prices of some banks that were established a few years ago were nearly equal to that of prestigious banks who have operated for more than 10 years in the country.
Another bank chair said that the State Bank of Vietnam’s recent rule to tighten up lending for securities investment with a ratio of less than 3% of banks total outstanding loans partially impacted to bank shares on the stock market. A large volume of shares has got stuck in banks that received securities mortgage.
Dr Nguyen Van Thuan, director of Accounting-Finance-Banking Department of HCM City Open University said that, some regulations issued recently by the SBV such as rule on securities lending or increasing compulsory reserve ratio to 10% would cause an increase in banking expenses and a reduction in profit of banks.
It is said that a rally on the stock market during the last sessions thanks to the increasing buying of foreign investors. Foreign holding in some banks nearly reached 30% so prices of bank shares are trending to decrease.
According to the chief of Eximbank’s financial investment office, Ton That Dien Khoa, at the beginning of this year, foreign investors were eager to buy shares, especially bank shares for the good development of the stock market but at present, they are waiting for IPOs of state giants such as Vietcombank, Mekong Delta Housing Development Bank, Bidv and Incombank. In addition, most of commercial joint stock banks announced to raise chartered capital within this year whereby banks could raise more than 100 trillion dong.
A financier gave his views that with the current market circumstance, short-term investors who hold a small volume of bank shares will surely feel worried but long-term investors still put their expectation in foreseeable growth of banks at the moment.