Year 2019 is about to pass and the stock of Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank, VCB) will surely be one of the stocks with strongest increase in the market. VCB is also a banking stock with the fastest rise this year.
From the beginning of the year until now, VCB’s market price has gone up by 65 percent to 88,400 dong per share, closing the session on December 13th 2019.
In a recent analysis report, Viet Capital Securities Company (VCSC) stressed that Vietcombank is on the right track to become the first listed company to reach a profit before tax of two billion US dollar by 2022.
“We think that Vietcombank has a strong prospect for revenue growth with a double-digit growth rate of 19.3 percent in the period of 2018 2022, thanks to the high Net Interest Margin (NIM) and bancassurance fee.”
Vietcombank has recently signed a comprehensive bancassurance product with FWD.VCSC forecasted that this deal will bring 400 million US dollars of profit to Vietcombank, along with the acquisition value of 18 million US dollars for 45 percent stake at Vietcombank’s direct insurance company VCLI and the elements recorded in the end of 2019 to early 2020.
According to Vietcombank, VCSC will get 5.3 percent of market share in terms of original premium fee and commission fee of 35 million US dollars in the first year of cooperation with FWD in 2020.
In addition to bancassurance, the major growth motivation of Vietcombank in the future also comes from home loans.
According to VCSC, thanks to the high proportion of non-term deposits which create an advantage in mobilisation costs, Vietcombank can offer home loans at competitive interest rates compared to other banks and quickly expand the market coverage.
The securities company predicted that Vietcombank’s home loans in 2019 and 2020 will see impressive growth of respectively 45 percent and 25%.
Vietcombank’s profit, as forecasted by VCSC, will increase by 28.9 percent in 2019, 42 percent in 2020 and 10.3 percent in 2021.
Prior to VCSC, Bao Viet Securities Company (BVSC) also issued positive prospect on Vietcombank’s growth, emphasising that bancassurance and home lending will be two of the bank’s important driving forces of the bank.
BVSC believed that income from the bancassurance deal is expected to contribute about one trillion dong to Vietcombank’s income in 2020 with gradual increase to two and three trillion dong in the following years.
Notably, BVSC estimated that Vietcombank has committed to sell at least six billion US dollars of its insurance fee revenue to FWD within the entire 15 years of the comprehensive cooperation agreement.
Along with that, BVSC stressed that the outstanding credit by the end of the third quarter of 2019 of Vietcombank reached 715.6 trillion dong (up by 11.7%), with focus on individual customer segment (24%), while corporate customer segment almost moved sideways (up by two percent). Home credit is still the bank’s main growth motivation of personal loans, accounting for about 55 percent of the segment and recording a more than 40 percent growth rate.
“We forecast that personal loans will continue to rise at an average of 23 percent in the period of 2020 2022 and 16 percent in the period of 2022 2025. The proportion of personal loans (excluding small and medium enterprises) will account for about 65 percent of the total outstanding credit in 2025,” BVSC stated.
