September of 2021 started not on a bright note for Vietnam’s stock market, as there was information about buying and selling activities of foreign investors in August 2021. According to statistics from Pinetree Securities Company, in August, foreign investors turned negative again after a very strong net buying in the previous month.
However, the excitement of the market from the end of August continued to the beginning of September.
August ended with continuous gaining sessions at the end of the month. Closing the session on August 31, VN-Index increased by 3.33 points (0.25%) to 1,331.47 points, HNX-Index increased by 0.44% to 342.81 points, UPCoM-Index increased 0.59% to 93.77 points.
Ending the morning session on September 1, VN-Index increased 4.76 points (0.36%) to 1,336.23 points, HNX-Index increased 0.28% to 343.78 points, UPCoM -Index increased 0.01% to 93.78 points. The gaining momentum was mainly led by chemicals, real estate, and banks.
However, in the whole month of August, more than 70% of bank stocks decreased in price. Bank stocks in August suffered a strong correction, causing 19 out of 27 stocks in this sector to decline. Notably, some stocks recorded a double-digit decline.
Specifically, out of 27 banking stocks listed on HoSE, HNX, and traded on UPCoM today, up to 19 stocks recorded a downtrend in August 2021. In which, VIB and ACB were the two biggest losers, both reaching over 10%.
In addition to the two banks mentioned above, a series of banking stocks also recorded a deep decrease in August 2021, mainly are listed on HoSE.
Specifically, shares of BID (BIDV) and LPB (LienVietPostBank) had the same decrease of 8% in August 2021, currently trading at 38,950 VND/share and 23,050 VND/share, respectively. Similarly, shares of HDB (HDBank), STB (Sacombank), OCB (OCB) had the same decrease of 7% in the month; shares of CTG (VietinBank) decreased by 6%; TCB (Techcombank) down 5%; NAB (NamABank) decreased by 4%.
In addition to 19 banking stocks that dropped in price in August 2021, BAB (BacABank), KLB (Kienlongbank), and BVB (Vietcapital Bank) were three stocks that moved sideways during the month. In contrast to the above group, although they also suffered from a correcting trend, some banking codes still maintained a positive increase in August.
In which, shares of NVB (National Citizen Bank) recorded the strongest increase, up to 17%, currently trading at 28,900 VND/share.
Another stock that recorded a double-digit increase in August 2021 is PGB (PGBank) when it increased from 19,900 VND/share to 21,800 VND, equivalent to 10%.
In addition, several large-cap bank stocks still maintained their gain in the past month such as VCB (Vietcombank) and VPB (VPBank) up 2%; SHB and VAB (VietABank) both increased by 1%.
Assessing the outlook for bank stocks from now until the end of the year, experts say that banks' profits will be affected in the context of lower lending rates to support people and businesses.
At VietinBank, the interest rate support credit package for customers affected by the pandemic could cost the bank 2,000 billion VND of interest income from the second half of 2021. Besides, VietinBank provision expenses are also forecasted to increase this year and in 2022, reflecting the negative impact of COVID-19. This can cause the bank’s expected profit to decrease.
Vietcombank estimates that its 8th interest rate reduction will reduce the bank’s interest income by 1,000 billion VND, bringing the amount of interest income to a total decline of 7,100 billion VND this year.
The prolonged social distancing in southern provinces may cause an increase in the rate of forming new bad debt. Net interest income will also be under pressure. Banks’ provisions increased by one and a half in the second quarter, and are expected to increase further until the end of the year. However, it is expected that bank profits may improve in part thanks to good credit growth in the second half of the year, provided that the pandemic will be under control.
With the current development of the COVID-19, the State Bank will likely increase credit limits for banks in the near future to promote the economy. The credit growth this year may reach 14%, higher than the whole of 2020.
Besides, since banks have been asked to reduce lending rates to support customers affected by the pandemic, SBV will also continue to implement loosening monetary policies. That makes banks’ interest income exposed to the possibility of being affected by lower lending rates, but the cost of capital will also be lower. Therefore, in the second half of the year, the banking sector’s NIM is expected to stay flat or decrease slightly only. The increase in fee income will be a differentiating factor among banks in the coming time.
Source: The Ministry of Industry and Trade