Opportunities for banks when moving their listing to the HoSE

25-Nov-2020 Intellasia | Dien dan Doanh nghiep | 6:51 AM Print This Post

On November 9th, more than 976,948,319 LPB shares of Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) were officially listed on the HCM City Stock Exchange (HoSE) at the reference price on the first trading day of 11,800 dong per share, and the amplitude on the first day was +/-20 percent compared to the reference price. LienVietPostBank was the first bank to shift the stock exchange floor in 2020.

LPB shares was first traded on the Unlisted Public Company Market (UPCoM) on October 5th 2017 at a starting price of 14,800 dong per share, and October 23rd 2020 was its last trading session on the UPCoM at closing price of 12,500 dong per share, helping the bank’s capitalisation reach 12.212 trillion dong. Currently, LPB’s charter capital is more than 9.769 trillion dong.

In the third quarter (Q3) of 2020, the net interest margin of LienVietPostBank was 1.815 trillion dong, up by 18 percent over the same period of last year (1.534 trillion dong), while the pre-tax profit was 737 billion dong, up by 43 percent over the same period of last year.

Recently, the HoSE has approved the listing of 2.16 billion ACB shares of Asia Commercial Joint Stock Bank (ACB). The listing value is nearly 21.616 trillion dong.

Previously, at the 2020 annual general meeting, ACB shareholders approved the shift of listing from the Hanoi Stock Exchange (HNX) to HoSE. ACB’s general director Do Minh Toan said that the bank targets to list on the HoSE in November and December after completing the dividend payment. Recently, ACB has completed distributing share dividends to shareholders.

In the first three quarters of 2020, ACB recorded a pre-tax profit of 6.411 trillion dong, 15 percent higher than the same period of 2019, equivalent to 84 percent of the 2020 plan. The bank’s after-tax profit grew at a similar rate, reaching 5.133 trillion dong. The total assets by the end of September of ACB were 418.748 trillion dong, up by nine percent compared to the beginning of the year. The bank’s lending to customers was more than 297.385 trillion dong, up by 11 percent over the same period of 2019.

The bad debts of ACB in the period increased by 71 percent to over 2.478 trillion dong compared to the beginning of the year. in particular, the debt group three rose by 2.4 times to 831 billion dong, debt group 4 increased by 75 percent to 543 billion dong, and debt group 5 increased by 22 percent to 1.105 trillion dong. Accordingly, the bank’s bad debt ratio went up from 0.5 percent to 0.83%.

For Saigon Hanoi Commercial Joint Stock Bank (SHB), year 2020 was the last year of the Scheme on handling the issues after the merger with Habubank (from 2016 to 2020) and opens a new stage of development. Notably, SHB has submitted shareholders for approval of the divestment in SHB Finance Company (SHBFC) to sell stake to a foreign strategic investor. Thus, the move to the HoSE at time will help SHB boost its image to foreign strategic investors and connect to international markets.

The HoSE has approved the listing of nearly 924.5 million VIB shares of Vietnam International Commercial Joint Stock Bank (VIB), equivalent to a value of nearly 9.245 trillion dong. VIB shares were first traded on the UPCoM on January 9th 2017. In the first nine months of 2020, VIB generated over 7.850 trillion dong of revenue and 4.025 trillion dong of pre-tax profit. In 2020, the bank sets a pre-tax profit target of 4.082 trillion dong, profit on capital ratio of 27%, and credit growth of 31%.

According to Saigon Securities Incorporation (SSI) Analysis Centre, the urgent need to move listing to the HoSE could be due to the pressure of competition, because other tier-2 banks of similar size are directly listed on the HoSE. In addition, the bigger cause may come from capital issue. The move of listing to the HoSE may improve the opportunity to attract capital in the future with better valuation. Currently, of the 31 private joint stock banks, 10 large-scaled banks are listed on the HoSE, while three banks are listed on the HNX and seven small-scaled banks are listed on the UPCoM.

According to Nguyen Hai, director of Phu Hung Fund Management Company, the first benefit to be mentioned is that banks’ shares will be eligible for margin trading, which will help improve liquidity. Specifically, according to regulations, shares when changing the floor will be allowed for margin trading after six months from the date of listing. In addition, the transparency and reliability of the corporate information on the HoSE will bring higher credibility to banks. Therefore, listing on the HoSE will be more well received by investors than the UPCoM.

In addition, some funds are not allowed to invest in shares listed on the UPCoM, so the move to the HoSE will increase the possibility that bank shares will be approached by large foreign investment funds.

Particularly, after shifting to the HoSE, bank shares have the opportunities to be included in the index baskets such as VN30, VNDiamond, VNFIN Select (!2%), VNFIN Lead (12%), etc. The index simulating funds will allow foreign investors to indirectly invest in bank shares that are listed on the HoSE.

Pham Hong Son, vice Chair of the State Securities Commission (SSC) said that Vietnam is cooperating with South Korea to develop a new securities trading system which is planned to be completed in 2021. This system is expected to contributing to the successful implementation of new products such as day trading, sales of securities which are pending settlement or new derivative products, etc. to increase the quantity of goods as well as the liquidity by attracting more domestic and foreign cash flows into the stock market of Vietnam. This will be an opportunity for listed companies in general and bank shares in particular when being listed on the HoSE.

 

Category: Finance, Vietnam

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