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What prices for BIDV’s shares?
In order to define the reasonable prices for BIDV’s shares which will be put into auction in late December, investors refer to the prices of two other big banks – VietinBank and Vietcombank.
The information about the IPO (initial public offering) of the Bank for Investment and Development of Vietnam BIDV, slated for December 26, has caught the special attention of investors because BIDV is considered one of the biggest banks now in Vietnam.
However, investors still cannot decide whether they should attend the auction where the starting price level has been set at 18,500 dong per share, or buy
On December 19, VCB of Vietcombank was traded at 22,000 dong per share, while CTG at 17,500 dong. As such, the starting price of BIDV, set at 18,500 dong per share is in the middle.
One of the criteria investors cite in comparing the three banks is their scale. By the end of the third quarter of 2011, BIDV’s total assets had reached 380 trillion dong. With that figure, BIDV has the total assets lower than VietinBank’s and higher than Vietcombank’s
According to Pham Duc An, Deputy General Director of BIDV, all the land plots managed by the bank have been counted on when calculating the bank’s total assets. The bank is now using 420,833 square meters in different localities of the country.
In terms of profit, in the first nine months of the year, the profit gained by BIDV was the lowest among the three banks. BIDV only got 2500 billion dong in profit, while VIetcombank 3500 billion dong, and VietinBank 4500 billion dong. With that profit, the ROA (return on assets) of BIDV in the first nine months of 2011 was the lowest, at 0.64 percent, of the three banks. The figures were 1.04 percent for Vietcombank and 1.08 percent for VietinBank.
According to Phan Thi Chinh, Deputy General Director of BIDV, the bank expects to obtain the profit of 9 trillion dong before risk provisioning. In order to improve the financial capability of BIDV after the equitization, the bank has increased the risk provisioning from 2 trillion dong to 4 trillion dong. As such, the pretax profit has decreased to 4200 billion dong.
“The profit seems to be lower than that of the other banks of the same operation scale, but the financial capability of BIDV would be much upgraded after the equitization.” Chinh explained.
While having the lowest profits among the three banks, BIDV has the highest CAR (capital adequacy ratio) among the three: 10.28 percent against 10 percent of Vietcombank and 9.86 percent of VietinBank. It is expected that the ratio of BIDV would continue rising after the IPO, because the bank keeps the state’s capital contribution unchanged, and it will only sell additional shares to increase the stockholder equity.
Developing retail banking services seems to be a strategy being followed by nearly all banks in Vietnam. Meanwhile, BIDV, Vietcombank and Vietinbank all have great advantages in the large networks nationwide. Of the three banks, Vietcombank has the largest network of ATMs, while VietinBank has the highest density of bank branches. Meanwhile, BIDV has a balanced development in both ATM and bank branches.
Tran Phuong, BIDV Equitization Project Director, said that BIDV’s business strategy in 2011-2015 has clearly pointed out that retail banking would be on the focus. The bank is striving to increase the proportion of capital to be mobilized from the public to 51 percent by 2015 and the retail credit to 18 percent by that time, to list its name in the top 3 of the retail banks with the biggest scale operation in Vietnam.
vietnamnet
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