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Four factors supporting bank share prices
Bank shares on the OTC market are now witnessing a new price increase, supported by four main factors.
According to Saigon Securities Incorporated (SSI), shares of all banks have increased sharply since the beginning of August, nearly hitting the peak seen in mid July.
In the first six months of the year, the stock market fell into prolonged decreases. This led to the sharp decreases of bank share prices with some share items dropping to below face value.
However, the situation has improved. Military Bank shares (MB), which once dropped to below VND13,000/share, have soared to VND17,000/share. On the OTC market, there were offers to sell the bank’s shares at VND19,700/share on August 12.
The sharpest price increase in bank shares belongs to Techcombank shares, with the highest price three-fold higher than face value.
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The reference prices of some share items |
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Banks |
Code |
Lowest price |
Highest price |
Average price |
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East Asia Bank |
EAB |
25,000.00 |
27,000.00 |
26,000.00 |
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Eximbank |
EIB |
24,000.00 |
25,000.00 |
24,500.00 |
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Habubank |
HBB |
11,000.00 |
13,000.00 |
12,000.00 |
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Military Bank |
MB |
15,000.00 |
17,000.00 |
16,000.00 |
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Orient Commercial Bank |
OCB |
11,000.00 |
13,000.00 |
12,000.00 |
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Phuong Nam Bank |
PNB |
12,000.00 |
14,000.00 |
13,000.00 |
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Vietnam International Bank |
VIB |
14,000.00 |
16,000.00 |
15,000.00 |
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Techcombank |
TCB |
25,000.00 |
30,000.00 |
27,500.00 |
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VP Bank |
VPB |
11,000.00 |
12,000.00 |
11,500.00 |
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Vietcombank |
VCB |
44,000.00 |
45,000.00 |
44,500.00 |
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(Source: SSI) |
The prices of some other banks, including VIB Bank, VP Bank, Eximbank and EAB, have also increased again since early August.
Experts say that there are four factors that support the bank share price increases.
First, after a long period of facing difficulties in liquidity, banks have improved their liquidity since the end of July.
As usable capital has become profuse, banks have slashed VND deposit interest rates to below 18% per annum, and US$ deposit interest rates to below 6.5% per annum from the highest peak of 8.5% per annum. The central bank’s report shows that commercial banks now do not have a demand to buy foreign currencies from the State Bank anymore.
Second, the State Bank has decided to halt licencing new banks, which means that the competition among banks and the short-term difficulties banks are facing will diminish.
Third, last week, the State Bank said commercial banks could purchase treasury stocks. In fact, An Binh Bank, Saigon-Hanoi Bank and Sacombank purchased treasury stocks in early 2008, when the prices dropped dramatically. However, the announcement by the central bank was still welcomed, as investors expect big transactions of treasury stocks to be carried out in the time to come, which will further support the price increases.
Fourth, the information about the appearance of new big shareholders of banks has really been good news for the market.
VP Bank has sold another 5% of stakes to OCBC, the third-biggest financial group in Singapore. OCBC got the stakes after accepting to pay a price 4.05 times higher than face value.
Similarly, the information that HSBC has raised its ownership ratio in Techcombank has also caught the special attention of the OTC market. This is the first time a foreign bank has held 20% of a domestic bank’s stakes. The price of the deal has not been revealed, but the successful purchase has pushed Techcombank’s share prices up in value.
Prior to that, Maybank of Malaysia purchased An Binh Bank shares for 5.5 times more than face value, though the price of the shares was much lower on the OTC market.
VNN
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