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Bank stocks remain lucrative
Despite the recent market uncertainty, bank stocks remain appealling to investors as several lenders promise upbeat returns in the forthcoming period.
Nguyen Huu Huan, lecturer at the University of Economics in Ho Chi Minh City, said, "The finance and banking sector seems to be outperforming several other sectors, however this might just be the tip of the iceberg."
Huan argues that the current valuation of bank stocks reflects the difficulties the sector has faced, including slow credit growth and sliding non-interest income, particularly from corporate bonds and bancassurance.
The quality of sector assets, a prime factor when choosing which bank stocks to invest in, is falling due to difficulties in the real estate market. “These factors, however, will gradually improve when the economic rebound intensifies,” said Huan.
Yang Seung Won, deputy general directpr of Shinhan Vietnam Securities JSC, said, "Even though the sector has encountered numerous hardships, a raft of supportive measures taken recently by the governement to help the real estate market and ease capital flow could yield more positive outcomes and relieve pressure on the banking system."
The overall capital adequacy ratio of the banking system remained at a relatively high level of 11.58 per cent in July
The overall capital adequacy ratio of the banking system remained at a relatively high level of 11.58 per cent in July.
In addition, banks listed on the Ho Chi Minh Stock Exchange are forecast to offer better value for investors compared to several other sectors this year and even into 2024, with pretax profit estimated to surge 8 per cent and 17 per cent on-year, respectively.
“The price-to-book ratio of banking stocks will move to a lucrative range of 1.5x-1.6x next year, 15-25 per cent lower compared to the previouis five-year average. Therefore, we expect banks to offer upbeat investment prospects for the foreseeable time,” said Yang.
According to Dao Minh Tu, deputy governor of the State Bank of Vietnam (SBV), "By September 29, credit volume of the whole system had reached close to $536 billion, up 6.9 per cent since the start of the year and higher than the SBV’s top estimate of 6.2 per cent."
Lending activities have improved gradually amid the peak year-end business season while remaining lower in volume compared to one year ago, while a fourth quarter survey on credit institution trends conducted by the SBV suggests that most lenders underestimated the third-quarter performance and profitability of the banking sector.
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