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More banks are listing their shares on HoSE

More banks are listing their shares on HoSE

Saturday 24, 10 2020
A series of banks such as VIB, LienVietPostBank, OCB, MSB, SHB, ACB, SeABank have plans to list their shares on the Ho Chi Minh City Stock Exchange (HoSE), some of which are implementing it very drastically.

Reasons for listing shares on HoSE

According to the "The stock and insurance markets restructuring until 2020 and orientations until 2025" project, the year 2020 is the deadline for joint-stock commercial banks to list shares on official stock exchanges.
Smaller banks have started listing shares on the Unlisted Public Companies Market (UpCOM) in 2020, including Nam A Bank, Viet Capital Bank). Also, larger banks like MSB, OCB, SeABank are going to list shares on Ho Chi Minh City Stock Exchange (HoSE) in late 2020 or early 2021.
Some banks are not under legal pressure because they have already listed shares on the Hanoi Stock Exchange - HNX (ACB, SHB) or traded on UPCoM (LienVietPostBank, VIB). However, they already have plans of switching to listing shares on HoSE in this fourth quarter of 2020, despite unfavorable market conditions caused by the Covid-19 pandemic.
There are several reasons for banks switching to listing shares on HoSE. According to SSI Securities Corporation, listing shares on HoSE can bring many benefits, including the opportunity to increase capital.
Specifically, this action will help qualify banks to conduct margin trading, thus improving stock liquidity. Besides, the transparency and credibility of the enterprises listed on HoSE also increase.
Banks that list shares on HoSe also attract mass investments because some funds are not permitted to invest in UPCoM shares.
According to SSI, in terms of key aspects including charter capital, years of operation, ROE, business performances, information announcement, and shareholders, banks do not face any specific difficulties when switching to listing shares on HoSE. Based on the aforementioned benefits, investors expect bank shares on HoSE to be revalued, which supports the share prices. 

The health of banks set to list shares on HoSE

With the new charter capital increased to VND 21,616 billion and total assets of nearly VND 400,000 billion, ACB is currently among large private banks. The scale of this bank's assets is equivalent to that of SHB, VPBank, MBBank, and Techcombank with around VND 400,000 billion.
ACB was in the top three most profitable private banks in Vietnam before the 2011 - 2012 period. However, while many competitors continued to grow rapidly, ACB's pre-tax profit saw little development in the 2012 - 2016 period. In the last two years, ACB's profit considerably increased. The pre-tax profit in 2018 increased by 2.4 times compared to 2017. In 2019, the pre-tax profit increased by 17% to over VND 7,500 billion.
Meanwhile, with a charter capital of less than VND 10,000 billion and total assets of over 200,000 billion VND, LienVietPostBank and VIB are two mid-range private banks in the banking industry.
The 9 months' pre-tax profit of LienVietPostBank reached more than VND 1,740 billion, exceeding the plan for the whole year and 6% higher than the same period. The profit in the third quarter alone was estimated at VND 736 billion, up 42%.
With the expected economic recovery and increased demands for loans in the last quarter, this year's pre-tax profit is forecasted to exceed that of 2019 and reach the highest in 12 years of operations. 
The strength of LienVietPostBank is its branch system with nationwide transaction offices through the local postal system.
However, LienVietPostBank's annual profit is much less than other banks of the same range. The profit in the 2016 - 2014 period was below VND 2,000 billion, except for 2019. The bank's profit in the 2012-2015 period did not even reach over VND 1,000 billion.
Except for 2019, which reached more than 2,000 billion of profit before tax, the interest amount for the 2016-2018 period of the bank is below this mark. The bank's profit in the 2012-2015 period even reached over 1,000 billion.
According to the business report of the third quarter, VIB's revenue reached VND 7,854 billion after the first 9 months, increasing by 34% year over year. The pre-tax profit was VND 4,025 billion, up 38%.
As of September 30th, the total assets of the bank reached over VND 213,000 billion; the credit balance was VND 151,000 billion, up 14.2% from the beginning of the year, making VIB one of the banks with the highest credit growth. The NPL ratio at that time was below 2%.
Regarding business operations, VIB leads the domestic car loan market share with 25%. It also accounts for 80% of the market share in the insurance sales segment through the banking channel of Prudential. Because of no subsidiary companies, the parent company is responsible for all operations. Especially, the bank’s profits have increased sharply from 2017 until now with an average growth of over 80% p.a.

Compiled by VietnamCredit

Banking & Finance

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