In the last five months, along with the declining trend of the market, the price of bank stocks dropped quite sharply. Many banks’ stock prices even dropped to the lowest level in the last two years.
Bank stocks currently contribute 22 percent of the total market capitalisation. Some stocks such as VCB, TCB, CTG, BID and so on have been positively affecting the rise of the VN Index.
Currently, the Price-to-Earnings ratio (P/E) of bank stocks is at 12.1. The Price-to-Book ratio (P/B) is 2.1, cheaper than the market average. However, the pressure of raising capital under Basel II standard and the failure to pay dividends in cash or shares such as SCB, TCB, TPB, VPB have made these stocks reach the lowest value in the last one year. As of the trading session on May 16, the market price of stocks such as TCB was 23,700 dong per share. The lowest price of TCB was 22,9500 dong per share in the session on May 8.
CTG is a high liquidity stock on Hochiminh Stock Exchange (HOSE) recently. In the trading session on May 16, CTG priced at 21,100 dong per share. Previously in 12/2018, this stock price fell to the bottom of 18,000 dong per share. SHB share was in the lowest price group in the market. This bank share was around 7,400 dong per share.
In 2018, there were three banks listed on the HOSE including HochiminhCity Development Joint Stock Commercial Bank (HDBank stock code: HDB), TienPhong Joint Stock Commercial Bank (TPBank stock code: TPB) and Vietnam Technological and Commercial Joint Stock Bank (Techcombank stock code: TCB). The banks listed on the stock exchange brought diverse choices for investors. However, not all bank stocks could benefit shareholders and investors from dividends or an increase in stock prices.
In 2019, only four banks plans to pay cash dividends including MBB (six percent), VCB (eight percent), BIDV (no less than seven percent), VIB (5.5 percent). Meanwhile, according to statistics in the recent half of the year, only a number of bank stocks on the floor increased in price such as VCB, MBB, CTG, BID and so on.
Macro and policy conditions in 2019 will not be as favourable as in the previous period. Meanwhile, the increasing global economic risk, from trade war to the risk of global economic recession, pushes domestic authorities to set a priority for stability than ever. From the second half of 2018, the State Bank of Vietnam (SBV) started to tighten monetary policy again, and expected to continue pursuing this policy in 2019.
Can Van Luc, finance and banking expert, said that in 2019, the pressure to raise capital for commercial banks would be greater than ever when the effective date of Circular 41/2016/TT-NHNN on regulating the capital adequacy ratio for banks was close (on January 1, 2020).
In order to maintain the capital adequacy ratio as prescribed, while still be able to promote business development in the coming period, the continued capital increase would remain a challenging problem for banks met and not met Basel II standards yet. Especially for banks that had not met Basel II standards, the time limit of one year would be even more pressure.
With these challenges, coupled with the current difficulties of the stock market, it was more difficult to attract cash flows from bank stocks. However, bank stocks with good foundation and prospects, especially those met Basel II standards and set high credit growth targets this year, would still be of special interest to investors.
