Bank stocks push
admin 18-10-2020, 13:19

Last week, banking stocks were the focus to support the uptrend of the market. Shares of 3 state-owned banks, including Vietcombank (HoSE: VCB), VietinBank (HoSE: CTG), and BIDV (HoSE: BID), all gained, after the news was legally “untied” to pay dividends in shares.

VCB market price increased by 4%, during the week with average liquidity of 1.1 million shares, 57% higher than last week. BID prices are also 4.6% higher than the beginning of the week, with an average trading volume of more than 3.5 million units, 2.5 times higher than the week 5-9 / 11.

Similarly, CTG shares recorded the biggest increase of nearly 13% with an average liquidity of over 11.8 million shares per session, 61% higher than last week. Especially on October 9, there were more than 16.8 million shares with the highest trading since mid-March 2018.

This bank has announced the resolution of the Board of Directors to approve shareholders’ opinions in writing on the plan to issue dividends to pay dividends from profit after tax and make 3-year fund deduction for 2017-2019.

Bank stocks push

Stock movements of CTG since the beginning of the year. Source: VNDirect.

As of the end of June, VietinBank had 23,579 billion dong of undistributed profit after tax, in addition to share capital surplus of 9,974 billion dong and reserves of 9,607 billion dong. In 2019, the bank approved by shareholders not to pay dividends, while in 2018 it is expected to divide 8% and in 2017, divide 5-7% by shares. The last time VietinBank paid dividends was September 2017, for fiscal year 2016, the rate of 7% in cash.

The business outlook of VietinBank depends on the capital increase roadmap. Total target assets increased by 1-3%, capital mobilization increased by 5-10% and outstanding credit increased 4-8.5%. Previously, the bank was assigned credit growth limit of 8.5%.

In the context that banks have to apply Circular 41/2016 on minimum capital adequacy ratios according to Basel II standards, capital raising becomes the focus of banks, if they want to continue credit growth. Raising capital adequacy ratio means banks have more room to expand lending and gain more profits.

In addition to state-owned banks, shares of some private banks have also received attention. For example, TCB shares of Techcombank (HoSE: TCB) hit the ceiling with a record liquidity of nearly 75 million units, equivalent to 1,703 billion dong, on October 14.

The Board of Directors of this bank approved to offer 4.76 million shares, or 0.14% outstanding shares to employees (ESOP), including 482,129 shares to foreign workers and more than 4.28 million shares for Vietnamese employees. Issuing price is 10,000 VND / share. The bank has locked foreign “room” at 22.4908% from 22.5076%.

Bank stocks changing exchange floor had positive developments. Photo: ACB.

Besides, stocks such as ACB, VIB, LPB continued to receive attention with exchange-floor information. VIB and LPB have been approved by HoSE to list, while ACB has just submitted documents in mid-October. LienVietPostBank’s Deputy General Director said that the shares are expected to be listed on HoSE in early November.

It is considered that the exchange will be a catalyst for stock revaluation, enhancing the value, image and brand of the bank. For example, after switching to HoSE, ACB shares can fall into the index basket such as VN30 (4% weight), VNDiamond (10%), VNFIN Select (12%), VNFIN Lead (12%) The index hedge fund will allow foreign investors to indirectly invest. According to VEIL fund belonging to Dragon Capital, the premium rate when negotiating ACB shares off-floor among foreign investors was 10% higher than the market price on the exchange, ranked third in the market after MWG (45%) and FPT (20%).

On the other hand, recently, some banks also started to publish 9-month business results with positive data. According to LienVietPostBank, 9-month pre-tax profit reached more than 1,740 billion dong, exceeding the 2020 plan, 6% higher than the same period in 2019. Thus in the third quarter, the bank’s profit was 736 billion dong, up 42%.

TPBank also reported a pre-tax profit of 3,024 billion dong, up 26% year-on-year and equivalent to 74% of the year plan. Meanwhile, MB also recorded 9 months’ pre-tax profit, 7% higher than the same period last year, equivalent to 90% of the year plan.

In the next week, banks will continue to publish third and third quarter profits. Previously, SSI Research Center – SSI Research also estimated profits of some banks, of which VietinBank is forecasted to have a pre-tax profit of 3,240 billion dong in the third quarter, up 3.8% over the same period; BIDV reached VND 2,400 billion, an increase of 3.5% over the same period.

Estimated profitability of some banks. Source: SSI Research.

Techcombank is forecasted to reach 3,260 billion dong of profit in the third quarter, up 2% year-on-year; HDBank (HoSE: HDB) reached more than 1,600 billion, up 30%. ACB’s pre-tax profit is estimated to increase by 23% to 2,370 billion dong in the third quarter.

Although the assessment that the impact of the pandemic will reduce the profit of the banking industry this year, securities companies believe that banks will make a breakthrough in 2021. SSI Securities Analysis Center – SSI Reserch expects after reimbursement. As a result of customer support, state-owned bank profits are estimated to increase 23% while that of joint stock commercial banks by 11.2%.

Source: – Translated by