Are Bank Stocks Still “Good to Go”?

Attracting new capital

Nam A Bank is the only bank approved by the Ho Chi Minh City Stock Exchange (HoSE) for listing in 2023, joining the group of banks with the largest market capitalization currently.

On the day NAB was listed, Mr. Tran Ngoc Tam, Deputy Chairman of the Board of Directors and CEO of Nam A Bank, stated that the listing of more than 1 billion NAB shares on HoSE would open up opportunities to access potential investors, attract new capital, and create strong momentum for the bank’s growth in the future.

According to the 2023 business report, Nam A Bank’s pre-tax profit reached over 3,300 billion VND, an increase of 50% compared to the same period last year, ranking among the top 12 banks with the best growth. The total assets reached over 210,000 billion VND, an increase of more than 18% compared to the beginning of the year. Especially, the bad debt ratio of this bank is tightly controlled according to the regulations of the State Bank.

It is worth noting that in the development plan after listing, Nam A Bank aims to maintain a minimum dividend ratio of 20% or higher based on the expected annual profit growth. Specifically, Nam A Bank projects a pre-tax profit of about 4,000 billion VND in 2024 and 5,000 billion VND in 2025. “Maintaining a dividend ratio of 20% aims to enhance financial capacity, competitiveness in the market, as well as expand business operations and credit growth. The bank will continue to implement many important strategies with two key pillars, namely green banking and digital banking, to ensure business objectives and create greater value for shareholders, customers, and partners,” said Mr. Vo Hoang Hai, Deputy CEO of Nam A Bank.

Regarding the opportunities of stocks transferring to HoSE, Mr. Tran Thang Long, Director of Analysis at BIDV Securities (BSC), stated that listed companies transferring to a larger exchange platform along with their growth plans in the future would have more opportunities and better recognition from investors. “When transferring to HoSE, the level of investor access to the company and its stocks will be improved, making it more convenient to issue stocks to strategic investors. The trading results of stocks on the official exchange also reflect the business momentum of the company,” said Mr. Tran Thang Long.

Opportunities still exist

According to the observation of the reporter from Nguoi Lao Dong newspaper, although NAB had its first trading session on HoSE, it was already included in the group of historically high-valued bank stocks, including VCB, BID, ACB, HDB, and MBB. NAB’s stock has been on an upward trend since it was listed on the UpCom exchange.

Returning to the banking stock group, although this group experienced a strong sell-off last week, causing the VN-Index to drop more than 10 points compared to the previous week, according to securities experts, it is normal for investors to take profits after stocks have continuously increased by 15%-25%, even 30%. However, the medium and long-term prospects of this group are still good.

Mr. Dam Nhan Duc, Director of Military Bank (MB), assessed that the growth momentum of the banking industry in 2024 is quite large, driven by the economic recovery; credit growth at a high level compared to GDP (usually double); especially, retail credit is always higher than the overall growth of the banking sector; strong payment growth with an average of about 30%, etc. These are the growth drivers for banks, including MB.

In 2023, MB’s consolidated profit reached over 26,300 billion VND, the highest ever. In terms of asset quality, if we look at the quarterly basis, MB has surpassed the most difficult period; bad debts have all been properly provisioned. Mr. Luu Hoai Son, Director of Planning and Marketing at MB, said that this year, the bank expects higher credit growth than the assigned 16%. Based on the growth momentum in Q4/2023, MB expects a profit of over 28,800 billion VND this year, relying on 3 major growth drivers: retail banking, digital transformation, and synergy within the group.

Dr. Nguyen Anh Vu, Head of the Finance Department – Ho Chi Minh City Banking University, analyzed that although the deposit interest rate continues to decrease and remains at a low level below 5% per year, the non-term deposit ratio (CASA) of the banking sector is still showing an increasing or stable trend thanks to the impact of payment technology and customer behavior. Therefore, with low capital costs and a competitive structure, the banking sector helps maintain a high net interest margin (NIM). “The deposit volume of the banking sector in 2023 reached a record level (13.5 million billion VND). While many other investment channels have not recovered, securities have the motivation from the target of being upgraded by 2025… This has made securities a attractive investment channel, and among them, banking stocks benefit the most from the high dividend yield of this group in the 2022-2023 period compared to the overall market. These are the supporting factors for the rise of banking stocks,” said Dr. Nguyen Anh Vu.

In fact, from an investment perspective, many people have a positive outlook on the banking stock group. Mr. Nguyen Van Minh (from Ho Chi Minh City) said that although he has already taken profits from most banking stocks, he is still closely monitoring this group. According to him, when the economy recovers, credit will improve, and bank profits will increase, creating a driving force for the upward movement of banking stock prices in the future.