On March 3rd, the Vietnam Technological and Commercial Joint Stock Bank (Techcombank, code TCB) has held the 2018 Annual general Meeting (AGM). One of the issues that investors have long been interested in is the plan to list TCB shares which was approved by shareholders. Although the listing time is not yet announced, Techcombank shareholders have authorised the bank’s Board of directors to carry out necessary procedures to complete the plan to list TCB shares on the Hochiminh Stock Exchange (HOSE) in this year.
Techcombank has not paid dividends for eight years despite being profitable. The accumulation of profits in a long time is considered an attractiveness to shareholders as well as new investors when the bank conduct listing. According to Techcombank’s leader, although the stock market grew sharply in 2017 and bank shares prospered, it was not the right time for TCB shares to get listed. “However, 2018 is a good time for Techcombank’s listing. It is just a matter of time in order to offer best interests for shareholders and investors”, said the leader.
In addition to the listing, Techcombank has also submitted shareholders the plan to sell nearly 14 million treasury shares under the 2018 employee stock ownership plan (ESOP). Representative of Techcombank said that in 2017, as the bank repurchased its shares from HSBC at over 23,000 dong per share, it will not sell shares lower than this level.
Techcombank is negotiating with investors from the US and Europe. In case of not selling out, the remaining shares will be sold to domestic investors to mobilise more capital.
Leader of Techcombank said that the bank currently has no plan to raise capital, but it will be considered after the completion of share offering. The current charter capital of Techcombank is over 11 trillion dong.
Information from HOSE showed that the agency has received the listing documents of Tien Phong Commercial Joint Stock Bank (TPBank, code TPB). The listing time is expected to be the end of the first quarter of 2018, after the bank completed the share issuance at a ratio of 15 percent to increase charter capital.
It is known that in late 2017, PYN Fund Management signed a share purchasing contract worth 40 million USD with TPBank. Accordingly, PYN Elite Fund will own 4.99 percent of TPBank stake after its issuance. PYN Elite Fund is the third largest foreign fund in Vietnam, with a total portfolio value of 417 million euros.
Thus, if the listing is implemented on schedule, TPBank is the second bank to list shares on the stock exchange in 2018. Previously, in January 2018, HOSE recorded the participation of Hochiminh city Development Commercial Joint Stock Bank (HDBank). In August 2017, VPB shares of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) were officially listed on this stock exchange.
So far, there are over eight banks listed shares on the HOSE, including Vietcombank (VCB), VietinBank (CTG), BIDV (BID), Military Bank (MBB), VPB, HDB, Sacombank (STB) and Eximbank (EIB); and three banks listed shares on the Hanoi Stock Exchange (HNX), including Asia Commercial Bank (ACB), Saigon Hanoi Bank (SHB) and National Citizen Bank (NVB). On the Unlisted Public Company Market (UPCoM), there are four shares being traded, including Lien Viet Post Bank (LPB), Vietnam International Bank (VIB), Kien Long Bank (KLB), and Bac A Bank (BAB), in which LPB, VIB and KLB are planning to shift the listing on the official stock exchange.
The prices of bank stocks experienced spectacular growth in 2017, in which VPB was a typical case of early execution of listing plan. Therefore, not only banks that have traded on the UPCoM such as LPB, VIB, and KLB are planning to list on the official stock exchange, banks that have not yet traded shares on the UPCoM such as Techcombank, TPBank and OCB also want to get the shares listed on the official floor.
According to Dr Nguyen Van Thuan, a financial expert, the listing of some banks on the stock exchange without going through the UPCoM is a remarkable move. However, the time to list shares still depends on market conditions. Bank leaders also said that it is necessary to choose the appropriate listing time in order to improve the stock liquidity.
In fact, many bank stocks have recorded strong price increase in the recent time. for example, CTG increased by 75 percent, VCB increased by over 90 percent, and BID, MBB, ACB and SHB even increased by over 100 percent. Thanks to the wave of the “king stocks”, new participants such as VPB and HDB also saw sharp rise from their trading on the Over the counter (OTC) until their listing on the HOSE.
According to observers, the strong growth of bank share prices is largely thanks to banks’ positive business results. In addition to the big banks like VCB, CTG, and BID, etc. closing the year 2017, many medium-sized banks unexpectedly joined the group of trillion-dong profit group such as VPB, HDB, and OCB, etc.
VCB topped the list of banks with the largest pre-tax profit in 2017 with 11.018 trillion dong, followed by CTG with 9.206 trillion dong, BIDV with 8.8 trillion dong, and VPB with 8.126 trillion dong, etc.
Closing the year 2017, Techcombank attained a pre-tax profit of over eight trillion dong, the highest in the bank’s history and it was the second consecutive year the bank saw a double growth in profit compared to the year before.
In 2018, Techcombank expects to increase revenue by 20 percent, pre-tax profit by 24 percent (reaching about 10 trillion dong), total assets by 17 percent (reaching about 315.184 trillion dong), mobilisation fund by 40 percent, lending by 18 percent and control bad debt ratio below 2 percent.
Notably, the bank has not planned to pay 2017 dividend. Nevertheless, it is said that what shareholders expect is the price increase of the bank shares after the listing.
Similarly, TPBank recorded impressive financial indicators in 2017. Specifically, after the risk provisioning, the bank’s profit increased by over 1.205 trillion dong, up by over 70 percent compared to 2016. The total assets of the bank reached over 124 trillion dong, up by 17.2 percent.
Last year, the lending growth of TPBank was 71.295 trillion dong, completed 103 percent of the annual plan, increased by nearly 22 percent compared to 2016, and its bad debt ratio was 0.87 percent. The 2018 business plan is not yet revealed by TPBank. However, in the context when the macroeconomic situation is forecasted to be positive, the bank is likely to set high plan this year.
According to HDBank, with profit far exceeding target in 2017, the bank expects to pay 2017 dividend at up to 30 percent, in addition to the bonus shares to shareholders. Detailed plan will be submitted at the 2018 AGM.
HDBank aims to increase pre-tax profit by 65.3 percent to 3.921 trillion dong and lending by 34.99 percent, thereby increasing the outstanding loans to customer to 148.510 trillion dong.
Meanwhile, Sacombank set pre-tax profit target in 2018 at 1.640 trillion dong, higher than the one trillion dong attained in 2017.
After the strong rise in the previous time, from the beginning of 2018 until now, the stock market has been under a heavy pressure on profit taking. However, with the stability of the “king stock” group, the market uptrend is still maintained. According to some securities companies, the increase of the market will continue as the picture of the banking sector is expected to be positive this year.
According to SSI Research, the average cost of capital in 2018 of banks will decline thanks to the support policies of the government, along with the significant improvement of the balance of payments in 2017-2018 period. Specifically, the operating rates and OMO lending rates were all cut by 0.25 percent over the past year.
The Initial Public Offerings (IPOs) and sale of stake at State-owned enterprises will continue to draw a large volume of foreign capital this year, making the SBV to inject a large amount of local capital into the system to keep the balance. Accordingly, SSI Research forecasted that the profits of 15 listed banks on the UPCoM will rise by 32.9 percent in 2018.
Finance and banking expert Dr Nguyen Tri Hieu assessed that banks’ profits are expected to grow stronger in 2018 thanks to the further improvement of lending. Nevertheless, banks should be cautious in setting high targets, as the competition in maintaining and expanding market share in credit growth has been steadily increasing, while lending rates have gradually been lowered, and the mobilisation costs can hardly be reduced due to the rise of input interest rates.
