Health of banks to be listed on the stock market

23-Oct-2020 Intellasia | Zing news | 6:02 AM Print This Post

The HCM City Stock Exchange (HoSE) has recently announced the approval of share listing for two banks including Vietnam International Commercial Joint Stock Bank (VIB) and Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank). At the same time, the HoSE has also received listing documents of Maritime Commercial Joint Stock Bank (MSB) and Asia Commercial Joint Stock Bank (ACB).

In particular, VIB plans to bring more than 924.49 million shares from the Unlisted Public Company Market (UPCoM) to the HoSE. The bank has also approved to cancel the registration for trading on the UPCoM.

For LienVietPostBank, the bank expects to list nearly 979 million LPB shares on the HoSE, equivalent to a charter capital of 0.769 trillion dong. The bank also has plan to privately offer 4.99 percent of stake to foreign investors after the change of stock exchange.

Among the above four banks, only MSB has not listed on a centralised stock exchange (HoSE, Hanoi Stock Exchange (HNX) and UPCoM), while VIB, LienVietPostBank and ACB have all traded shares on the stock exchanges. ACB is currently listed on the HNX, VIB and LienVietPostBank are listed on the UPCoM.

By the end of October 20th, the price of ACB share was 25,300 dong per share, equivalent to a market capitalisation of nearly 54.7 trillion dong. The bank is currently having the highest market capitalisation on the HNX.

Considering listed banks only, ACB share price currently ranks the sixth after shares of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank), Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV), Commercial Joint Stock Bank for Industry and Trade of Vietnam (VietinBank), VIB, and Tien Phong Commercial Joint Stock Bank (TPBank). However, in the last six months, the market price of ACB shares has risen by nearly 60%. The change of stock exchange comes with great expectation from bank owners that the shares will be included in many important index baskets with significant proportions such as VN30 (about four percent), VNDIAMOND (10%), VNFINSELECT (12%), VNFINLEAD (12%), etc., thereby increasing the market value of ACB shares.

Meanwhile, VIB and LienVietPostBank are having middle-level of market capitalisation on the UPCoM but their market capitalisation is the highest among listed financial and insurance companies on this stock exchange.

By the end of October 20th, VIB was traded at 33,300 dong per share, equivalent to a market capitalisation of 31 trillion dong, while LPB shares of LienVietPostBank closed the day at 12,300 dong per share with market capitalisation of more than 12.3 trillion dong.

Although the two market prices are in two different zones but compared to six months ago, the two stocks are both in the group of stocks that recorded sharp price increase with more than double in VIB and more than 70 percent in LienVietPostBank.

According to LienVietPostBank’s leader, the progress of changing stock exchange of LPB will be one to two months earlier than other banks. It is expected that LPB shares will be listed on the HoSE in the beginning of November. The reference price on the first session is determined by the average price of the last 20 trading sessions on the UPCoM.

The transfer of stock exchange, according to LienVietPostBank’s leader, is expected to also enhance LienVietPostBank’s brand name and value in the eyes of investors. It will also help significantly improve LPB’s liquidity compared to the time of listing on the UPCoM in the past two years. That is expected to create more favourable conditions for shareholders, increase the stock value, and support the bank in capital increase.

How are these banks doing?

With a new charter capital level of 21.616 trillion dong and total assets of nearly 400 trillion dong, ACB is currently among large-scale private joint stock banks. The bank’s asset scale is now equivalent to that of Vietnam Prosperity Commercial Joint Stock Bank (VPBank), Saigon Hanoi Commercial Joint Stock Bank (SHB), Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Military Commercial Joint Stock Bank (MBBank) (around 400 trillion dong).

ACB used to be in the top three most profitable private joint stock banks in the country in 2011 2012. However, while many rivals continued to grow rapidly, ACB’s pre-tax profit almost moved sideways in 2012 2016 period.

In the last two years, ACB’s profit recorded strong rise. Particularly, the bank’s pre-tax profit growth in 2018 was 240 percent compared to 2017, and 17 percent in 2019 (reaching over 7.5 trillion dong).

According to ACB’s financial statement in the second quarter (Q2) of 2020, since the bank’s provisioning expenses increased by more than five times (to over 532 billion dong), the pre-tax profit only increased by five percent compared to the same period of last year to 3.820 trillion dong, although the net profit from business activities grew by 17%.

By the end of Q2 of 2020, ACB’s total assets were 396.760 trillion dong, up by 3.5 percent compared to beginning of the year; outstanding deposits of customers were 330.550 trillion dong, up by 7.3%; and outstanding loans to customers were 283.755 trillion dong, up by 5.6%. The bank’s ratio of bad debts on total outstanding loans was below one percent.

Meanwhile, with charter capital of less than 10 trillion dong and total assets of above 200 trillion dong, LienVietPostBank and VIB are the two middle-scaled private joint banks in the system. According to the business results in Q3 2020, VIB generated 7.854 trillion dong of revenue after the first nine months of the year, up by 34 percent over the same period of last year. the bank attained a pre-tax profit of 4.025 trillion dong, up by 38%.

As of September 30th, the bank recorded more than 213 trillion dong in total assets, 151 trillion dong in total outstanding loans, up by 14.2 percent compared to the beginning of the year. It is one of the bank with the highest credit growth in the system. VIB’s bad debt in the same period was below two percent.

VIB’s biggest strength in business activities is holding the leading market share in car loans (more than 25%). The bank also owns the top market share (80%) in selling insurance of Prudential through banking channel. In addition, since VIB currently does not have a subsidiary, all of its activities focus on the parent bank.

In recent years, VIB is one of the few banks recording six consecutive years of profit growth (since 2013). Particularly, the bank’s profit has sharply been rising from 2017 until now with an average of over 80 percent per annum.

The report updating business results of LienVietPostBank showed that the bank’s pre-tax profit in the first three quarters was more than 1.740 trillion dong, exceeding this year’s plan, and being six percent higher than the same period of last year. It is estimated that in Q3 alone, the bank attained a profit of 736 billion dong, up by 42%.

The bank’s leader said that with the forecast of the economy recovering in the last quarter, the demand for business loans and consumption loans increasing again, LienVietPostBank estimated that its profit this year will exceed 2019′s and reach the highest level in the last 12 years of operation.

As of September 30th, the bank’s charter capital was 9.769 trillion dong, while total assets were 214 trillion dong. In particular, mobilisation in market 1 was 175 trillion dong, and lending to market 1 was 160 trillion dong.

The biggest strength of LienVietPostBank is a network of branches and transaction offices across the country through the local postal system. The bank currently has the second largest transaction office network in the country with one headquarter, three representative offices, 76 branches and 463 transaction offices, and 673 postal transaction offices (only after Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam (Agribank) with more than 2,200 points.

However, the bank’s annual profit is modest compared to other banks with similar scale. Except for year 2019 in which LienVietPostBank achieved more than two trillion dong of pre-tax profit, the bank’s profit in 2016 2018 period was all below this level. The profit in 2012 2015 period of the bank was even less than one trillion dong.

 

Category: Finance, Vietnam

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