Stock market frenzy signals financial capacity intentions

10:55 | 10/03/2021
A successful listing would further boost the financial foundation of Vietnamese lenders, which might explain the recent rush of banks tapping public funds, switching exchanges, or tying the knot with other suitors.
1534 p22 stock market frenzy signals financial capacity intentions
Stock market frenzy signals financial capacity intentions. Photo: freepik.com

SeABank – the banking arm of BRG Group’s ecosystem – has just confirmed its forthcoming first trading date on the Ho Chi Minh City Stock Exchange (HSX).

More than 1.2 billion shares of SeABank (ticker: SSB) were listed in December and will be officially traded from March 24, with a reference price on the first trading day of VND16,800 (7.3 US cents) per share.

Last week, BAC A BANK also listed 708.5 million shares on the Hanoi Stock Exchange (HNX). Having been conducting transactions on the Unlisted Public Company Market (UPCoM) since 2017, its stocks have officially ceased on the system and shifted to the HNX.

Under Decision No.765/QD-SGDHN enacted by the HNX in late January, BAC A BANK is allowed to list 708.5 million common stocks, with the ticker named BAB.

“The fact that BAC A BANK is officially listed on the HNX is in line with the bank’s development roadmap, contributing to reaffirming the prestige and status of the bank on the market, increasing the benefits of all stakeholders, and ushering in a new long-term capital mobilisation channel” the bank said in a press release. “This will also help ensure the bank’s information is more transparent and increase its value and ability to approach new investors – this is a firm foundation for BAC A BANK to continue strongly and grow.”

On the same boat, Saigon-based commercial bank OCB officially went public on the HSX on January 28, also being the first bank stock to be listed this year.

However, the very first day of going public was not as rosy as expected. The frenzy of broad-based sell-off in Vietnam’s stock market has considerably hampered OCB’s share price. However, experts believed with the bank’s ample fundamentals and potential, OCB will attract the attention of foreign and local investors alike.

A source told VIR that OCB is preparing to sell another 10 per cent of its shares to potential foreign investors after Japan’s Aozora Bank acquired a 15 per cent stake in a deal worth $139 million in earlier 2020.

This was the first merger and acquisition by Aozora in a foreign market since 2001 and made Aozora OCB’s largest shareholder.

In terms of National Citizen Bank (NCB), the bank plans to sell capital to a foreign strategic investor to supplement their financial foundation and widen its network.

Nam A Bank, after filing an initial public offering (IPO) on UPCoM last year, now aims to list on the HSX. The bank also lifts its foreign ownership limit to 30 per cent, seeking to tap into the red-hot international markets.

Vietbank and Saigon Commercial Bank (SCB) also signaled their intention to find interested international suitors who could help them to enhance their financial capacity as well as competitiveness. Previously, SCB was allegedly in the negotiation with an overseas strategic partner after completing the restructuring and listing plan.

Agribank, one of Vietnam’s four state-owned lenders, now still pales in comparison with its peers in terms of the growth rate of business operations, total assets, as well as capital adequacy ratio compared to Basel II standards.

The major roadblock lies in Agribank’s dependence on the state budget and capital hike, said Tiet Van Thanh, general director of Agribank. The bank has still failed to complete its equitisation tasks and has not yet filed for an IPO. The State Bank of Vietnam (SBV) recently urged Agribank to coordinate with relevant ministries and parties to accelerate its equitisation process, especially issues related to real estate arrangement.

In December, Ho Chi Minh City-based privately-held lender ABBank also filed for an IPO on the UPCoM. ABBank has the ticker code ABB and listed around 571 million shares, equivalent to a market cap of VND5.713 billion ($248.4 million).

MSB, formerly known as Vietnam Maritime Commercial Joint Stock Bank, officially made its debut on the HSX on December 23.

Elsewhere, Petrolimex Commercial Joint Stock Bank (PGBank) began publicly trading on December 24. The bank’s foreign ratio is currently capped at 30 per cent in accordance with the SBV’s regulations. Despite its eagerness, PGBank has still to tie the knot with an interested lender. In June 2020, the deal between PGBank and HDBank was envisaged to bear fruit after its failed attempt to merge with VietinBank in 2017, according to Petrolimex’s deputy general director Luu Van Tuyen. All eyes are now on PGBank’s decision at its upcoming AGM this month.

According to US financial giant JP Morgan, Vietnam banks offer the best combination of growth and return on equity in ASEAN. High nominal GDP growth and resilience in the last 12 months provide visibility on credit and earnings growth over the next few years. JP Morgan expects a 16 per cent earning per share compound annual growth rate for the sector over 2020-2023. This should lead to 8-42 per cent upside for stocks over the course of the year, and meaningfully higher in the next three years.

By Celine Luu

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