Many banks missed the listing appointment in the past year and promised to go listed this year, but on the condition that the market had favourable movements.
Deadline for listing: at the end of 2020
In the Project “Restructuring the securities market and insurance market to 2020 and orientation to 2025″ approved by the prime minister at the end of February 2019, a series of market restructuring solutions had been proposed.
In particular, one of the measures to diversify the commodity base on the market was to force joint-stock commercial banks to be listed companies. Specifically, the Project required that by the end of 2020, all commercial joint stock banks must list and register to trade stocks on the central securities market (listed on Hochiminh Stock Exchange (HOSE), Hanoi Stock Exchange (HNX) or register for transactions on Unlisted Public Company Market (UPCoM)).
The “go public” requirement for banking stocks was proposed earlier in the Vietnam Banking Industry Development Strategy until 2025, with orientation to 2030 approved by the prime minister in August 2018. According to the Strategy, one of the objectives of the banking industry by 2020 was to complete the listing of shares of joint stock commercial banks on the stock exchange.
In addition, in 2015, the Ministry of Finance issued Circular 180/2015/TT-BTC requiring public companies and Public companies cancelled listing before the effective date of this Circular must complete procedures for registering transactions on UPCoM in 2016.
Under the direction of the prime minister and the State Bank of Vietnam (SBV), banks were not required to list, but must register to trade on UPCoM, in order to improve transparency in operations as well as bank stock trading transactions.
SBV and the State Security Commission of Vietnam (SSC) repeatedly issued official letters to remind the policy and roadmap for commercial banks to put stocks on the stock exchange.
Currently, there are 17 banking stocks being listed and registered for trading on all three stock exchanges: HOSE, HNX and UPCoM, such as CTG, BID, ACB, VCB, EIB, STB, and SHB., MB, TPB, VPB, HDB, NVB, TCB, VIB, KLB, LPB, BAB. The figure is equivalent to more than half of the number of joint stock commercial banks in the system, which is 31 banks.
Delay to go public because the market is not favourable
Some banks planned to go public in the past year, but not yet implemented such as Orient Commercial Joint Stock Bank (OCB), Nam A Commercial Joint Stock Bank (Nam A Bank), Vietnam Thuong Tin Commercial Joint Stock Bank (Vietbank), etc. The Board of directors of VietBank recently informed shareholders and extended the third time to close the list of shareholders to carry out the procedures for securities registration and depository at the Vietnam Securities Depository centre (VSD) and register for trading on UPCoM.
Similarly, Nam A Bank closed the list of shareholders on October 24, 2018 to bring stocks to UPCoM, but then announced to change the closing date of the list. Tran Ngoc Tam, Chief Executive Officer of Nam A Bank, said that the bank would put stocks on public this year and sell shares to foreign investors to raise capital. Currently, Nam A Bank’s chartered capital was 3.353 trillion dong, the Bank approved plan to increase its chartered capital to 5 trillion dong by issuing shares.
With OCB, the Bank had a plan to list in Q4/2018, after submitting to the general Meeting of Shareholders for approval. However, the stock market conditions at the end of 2018 were not favourable, this bank postponed to go public. Trinh Van Tuan, Chair of OCB Board of directors shared that the Bank would consider the situation to deploy the listing plan early in 2019, but with appropriate market conditions.
In addition, some banks on UPCoM planned to switch to HOSE listing such as Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank), Vietnam International Commercial Joint Stock Bank (VIB).
In fact, after the wave in early 2018 of HCM City Development Joint Stock Commercial Bank (HDBank), Tien Phong Commercial Joint Stock Bank (TPBank), Vietnam Technological and Commercial Joint-Stock Bank (Techcombank), etc. the implementation of public issuance of banks gradually became quiet. Bank stock prices corrected at the end of 2018, early 2019, causing many banks to be hesitant in the plan of listing and registering stock transactions. On the other hand, records and procedures of some banks had not been completed.
On the stock exchange, thanks to positive business results, banking stocks played a leading role in the market recently. However, according to financial analysts, in 2019, the banking industry faced many challenges. For example, the industry credit growth plan of 14 percent this year would partly affect the profitability of banks when credit was still the main profitable business.
The biggest pressure on the banking system was the increase in capital to meet Basel II standards. A banking expert estimated that the number of shares issued in 2019 to raise capital would up to $3 billion -$4 billion.
The large number of shares issued to the market would dilute the stock price and the stock differentiation would be clearer. Banks with successful capital increase as well as good non-interest revenues would attract investors, stock prices had an upward prospect; on the contrary, stock prices were in danger.
In terms of business results estimated in the first six months, many banks achieved or exceeded 50 percent of the business targets for the whole year. In which, at Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), this bank leader said, the Bank completed 50 percent of the 2019 pre-tax profit plan (20 trillion dong). However, the positive profit level mainly belonged to large-scale and well-run banks.
In that context, banking stocks continued to differentiate: increase, decrease, or move sideways. Banks in the lower group had not been on the floor yet, so it was not easy for investors to observe how the prices of these banks’ shares change.
Therefore, according to securities analysts, when investing in bank stocks, investors should carefully select stocks with good fundamentals and meeting the value investment standards at least in medium term.
In fact, some banks did not want to go public. Nguyen Tri Hieu, financial and banking expert, said that one of the main reasons was the low business efficiency of banks, Return on Equity (ROE), Return on Assets (ROA) was lower than the industry average. Meanwhile, bad debt was still high, which would affect stock prices. Bringing stocks to public also meant that banks had to be more transparent in their business activities, publicise their financial statements, while some banks had not met this requirement yet and needed more time to complete.
