Bank stocks surge ahead of Lunar New Year: Several stocks rise over 3%, with one hitting the daily limit.

Closing the session on 5/2, the entire market witnessed 26 out of 27 stocks surge, many of which registered significant gains. Among them, VietinBank's stock CTG unexpectedly hit the ceiling price with the highest liquidity in over 2 years.

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Bank stocks have all increased sharply in the trading session on February 5 and are the main driving force behind the 13.51-point increase in the Vn-Index. Of the top 10 stocks that have the most positive contribution to the Vn-Index, 8 stocks are from the banking group, with the main ones being CTG, BID, and MBB.

At the close of February 5, the entire industry recorded 26 out of 27 stocks with increased prices, with many stocks increasing significantly. In particular, CTG of VietinBank unexpectedly hit the price ceiling with the highest liquidity since the beginning of 2022. Currently, CTG shares are being traded at 33,900 VND/share, only about 9% away from the historical peak of 37,000 VND/share (adjusted for dividends).

Earlier, VietinBank announced its financial report for the fourth quarter of 2023 with a consolidated pre-tax profit of 7,699 billion VND, an increase of 43.4% compared to the fourth quarter of 2022. For the whole year of 2023, VietinBank’s pre-tax profit reached 25,100 billion VND, an increase of 18.8% compared to the same period and achieved the business plan. This is the first time VietinBank’s profit has exceeded 1 billion USD and ranks 5th in the ranking of last year’s profits for the entire industry.

Following CTG, ACB shares also increased by 5.9% to a historical high of 27,800 VND/share. ACB’s liquidity also reached its highest level since the beginning of the year. ACB shares continuously set new highs in the context of the bank announcing its business result for 2023 with a consolidated pre-tax profit of over 20,000 billion VND, completing 100% of the annual plan, an increase of 17.3% compared to 2022. In the fourth quarter alone, ACB recorded a pre-tax profit of 5,043 billion VND, an increase of 39.6% compared to the same period in 2022.

MBB shares of MB also showed an impressive performance when it increased by more than 5.5% to nearly 23,000 VND/share. The share price of this stock is now only less than 1 trading session away from the ceiling price. Since the beginning of the year, MBB has increased by more than 23% in total and is one of the strongest performing stocks in the VN-30 group.

Recently, MB announced its financial report for the fourth quarter with a pre-tax profit of 6,287 billion VND, an increase of 38.6% compared to the fourth quarter of 2022. The accumulative pre-tax profit of the bank in 2023 reached 26,306 billion VND, an increase of 15.7% compared to 2022. With the above results, MB ranked third in the entire banking industry in terms of profit and surpassed other private joint-stock banks such as Techcombank (22,888 billion VND), ACB (20,068 billion VND), and VPBank (10,987 billion VND).

In addition to the mentioned stocks, a series of other bank stocks also increased by more than 3% in today’s session such as VIB (+4.7%), TCB (+4%), BID (+3.7%), TPB (+3.7%), OCB (+3.1%),…

After surpassing the historical peak at the end of last week, HDB shares of HDBank continued to increase by more than 1.3% and set a new peak at 22,650 VND/share. Overall, from the beginning of the year until now, this stock has increased by nearly 12% in total.

HDBank recently announced its business results for 2023 with a consolidated pre-tax profit of a record 13,017 billion VND, an increase of 26.8% compared to 2022. This result helps HDBank have a high continuous growth decade with a compound annual profit growth rate of 49.1%.

In addition to HDB, many bank stocks have surpassed or approached the historical peak such as BID, ACB, VCB, and LPB.

Bank stocks increase strongly on 5/2 session (Source: VCSC)

Bank stocks have been dynamic since mid-December after a series of positive information about credit growth as well as support policies.

At the beginning of 2024, the SBV has sent a document to credit institutions regarding the credit growth plan for 2024. Accordingly, to create favorable conditions for credit institutions to supply credit capital to meet the economic growth demand, the SBV has assigned the entire credit growth target to be oriented at 15% and requested credit institutions to control credit growth in 2024. The mechanism of assigning the entire credit growth limit from the beginning of 2024 is different from previous years – the capital is divided into multiple phases and the banks are required to submit proposals and then consider expanding the room.

In addition, the SBV has issued Circular 22/2023/TT-NHNN amending and supplementing some articles of Circular 41/2016/TT-NHNN on capital adequacy ratio for banks and foreign bank branches. The circular takes effect from July 1, 2024. This circular is considered to have a positive impact on many banks as it supports the ability to increase credit growth.

Recently, the Law on Credit Institutions (amended) has also been approved by the National Assembly with important regulations to create a legal corridor to help limit manipulation, negative phenomena, “backyards”, risk control, and bad debt settlement for the banking industry…

The SBV is also considering extending the implementation of Circular 02 in the context of the economy has not recovered, businesses still need support from the government. Extending the effective period of the circular helps the process of provisioning and bad debt handling of banks to take place gradually, without affecting the financial system. As a result, the pressure to reduce the quality of assets will be reduced in the second half of 2024 and 2025.

Analysts believe that in the long-term, bank stocks still have many bright spots, such as improving asset quality, better credit growth, and higher NIM. However, in the short term, the banking industry still faces many pressures related to bad debt and corporate bonds. Moreover, although the deposit interest rates of banks have just entered a new decrease phase, NIM may not decrease proportionally because high-cost deposits still exist, while banks are also under pressure to reduce lending rates.

“The valuation of bank stocks is attractive, on par with the historical average but the ROE and asset quality of this industry is currently much better than in the past,” said ACBS Securities.

In the 2024 industry outlook report, BIDV Securities Company (BSC) also maintains an optimistic recommendation for the banking industry in 2024 based on the following main points: First, the low-interest-rate environment along with the prospect of economic recovery helps improve credit growth and NIMs increase due to the reset cost of capital; Second, enhancing bad debt settlement in 2023 creates a space to recognize profits from debt recovery in 2024, thereby making the prospect of profit growth in 2024 more optimistic, supported by the still appropriate valuation to accumulate.

SOURCEcafef
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