Many banks restart their listing plan after shares surge

22-Nov-2019 Intellasia | Dau tu Chung khoan | 6:02 AM Print This Post

Recently, the banking stocks have created a strong impression on the market. Therefore, requiring all commercial banks to go listed and to register their securities transactions until the end of 2020 of the prime minister is mentioned as a big task for unlisted banks.

So far, only 17 out of the 31 joint stock commercial banks are listed and registered for trading on Hochiminh Stock Exchange (HOSE), Hanoi Stock Exchange (HNX) and Unlisted Public Company Market (UPCoM). Among the remaining 14 banks, some banks are starting to plan for IPO such as Southeast Asia Commercial Joint Stock Bank (SeABank), An Binh Commercial Joint Stock Bank (ABBank), Sai Gon Joint Stock Commercial Bank (SCB), and Nam A Commercial Joint Stock Bank (Nam A Bank).

The past two years, when the stock market recovered to the peak it set 10 years ago, has been the golden period for banks to deploy their listing plan.

However, it is not possible for all banks to carry out the plan. All newly listed banks are those who have achieved impressive results and their brands have been strengthened in the market such as Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), Vietnam Prosperity Joint-Stock Commercial Bank (VPBank), HCM City Development Joint Stock Commercial Bank (HDBank), and Vietnam International Commercial Joint Stock Bank (VIB).

For example, when VIBBank registered a transaction on UPCoM, the profit was only a few hundred billion dong but it was now categorised into over two trillion dong.

Techcombank still maintains the leading group in profit of private commercial banks (10.7 trillion dong).

In the eyes of investors, listed banks must comply with the regulations for listed businesses, which also partly proves more transparency in business activities.

Vietnam’s banking industry after a period of high credit growth showed signs of slowdown in 2018 when the target credit growth was 17%, but in fact it only reached about 14%.

Many policies have been proposed to bring the banking industry into a safer development trajectory such as tightening capital flows into areas such as real estate, reducing the proportion of short-term capital for medium and long-term loans from 45 percent to 40 percent and will continue to lower.

In particular, recently, the interest rate level has started to rise, however, mainly increased in the long terms for some banks that are facing difficulty in bringing the ratio of short-term mobilised capital for medium and long-term loans to 40%, or some small banks need capital in the period of high competition.

The turmoil in the profit rankings shows that the game has changed, the differentiation and restructuring are happening strongly.

Banks are racing to develop retail, boosting non-credit income through ecosystems and technology innovation.

From seeing this change, investors tend to choose banks with good asset quality, high profitability ratios, and especially attractive market prices.

Therefore, listed names such as VCB, ACB, TCB… still have many advantages in the eyes of investors compared to the “rookies” who are newly listed.

For example, at the end of 2018, the profit before tax of An Binh Commercial Joint Stock Bank (ABBank) reached 924 billion dong, calculated on the charter capital of more than 5.7 trillion dong, the income per share was only about 1,200 dong which is quite low compared to the industry average level.

Because this year is a pivotal year for banks to go listed in accordance with regulations, analysts said that business results will be improved by many banks.

In fact, in the past nine months, many banks reported impressive gains compared to the same period, even some unlisted banks also announced monthly profits that they had never done before.

However, a feature that many investors are interested in is the profit structure of banks. For example, at Techcombank, a listed bank, financial statements show credit quality, diversity in revenue structure and competitive advantages.

Securities companies are also positive, but the stock market price does not have large fluctuations in the bank wave.

This is explained by many brokers because investors are afraid that the bank’s profits depend too much on a number of large customers (for example, credit is mainly for lending and investing in bonds for large private corporations in the country).

With many banks not yet listed, the attractiveness of financial indicators and profit structure is quite low.

Going listed but the stock price does not increase, it has to fulfil many obligations on information disclosure, must pay the membership fee of the stock market, the brand does not increase its strength. Therefore, the hesitation of banks is easy to understand.

However, from a professional perspective, Can Van Luc, a financial expert, said that it was absolutely necessary to require banks to comply with the direction of the prime minister.

This was to create more pressure for banks to operate more effectively and at the same time, to continue to increase the public’s supervision, and limit the capital-pouring transactions that involve risks to related businesses, in its cross-ownership ecosystem and network of major shareholders.

By doing this, the “heart of the economy” would be increasingly healthy, supporting sustainable development.

 

Category: Finance, Vietnam

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