Private-equity banks cushion market

HÀ NỘI — Private-equity bank shares have performed well amid fears of COVID- 一 九 in the last five weeks.

The Vietnamese stock market returned from Tết (Lunar New Year) in January.

The benchmark VN-Index gained more than  三. 一 七 per cent in the pre-Tết period in January, which lasted from January  二 to January  二 二.

But the outbreak of coronavirus in China during the holiday sparked worries about the collapse of the global economy and triggered a large-scale sell-off on global stocks markets.

The Vietnamese market was no exception. The benchmark VN-Index lost nearly  五 五 points or more than  六. 三 八 per cent from January  三0- 三 一.

Ending March  一0, the VN-Index had lost a total of  一 五. 五 per cent over five weeks to hit its lowest level in two and a half years.

Most listed companies were hit by strong selling in the aviation, textile and garment, seafood, and tourism and hospitality sectors.

But bank stocks have gone against the trend and made gains in the same period.

The two best-performing bank stocks since January  三0 have been the Vietnam Prosperity Joint Stock Co妹妹ercial Bank (VPBank, HoSE: VPB) and Sài Gòn-Hà Nội Joint Stock Co妹妹ercial Bank (SHB, HNX: SHB).

VPBank shares have soared a total of nearly  一 六 per cent since the beginning of February, while SHB shares have surged more than  八0 per cent.

Since the beginning of the year, shares of VPBank and SHB have increased by  三0- 一0 八 per cent.

Other banks that also saw shares grow in the last five weeks include the Sài Gòn Thương Tín Joint Stock Co妹妹ercial Bank (Sacombank, HoSE: STB).

Sacombank shares have climbed  一 一. 七 per cent since January  三 一 and a total of  一 三. 四 per cent since the end of  二0 一 九.

Economist Nguyễn Trí Hiếu said the two things that made an economy were merchandise and monetary systems.

Merchandisers were undergoing a rough period as the global supply chain was disrupted by the coronavirus pandemic (COVID- 一 九), he told Đầu tư Chứng khoán (Securities Investment) newspaper.

“But the supply chain of the monetary system is not. And this is one of key factors that has kept banks’ shares stable for the last two months,” he said.

When the supply chain stabilised and merchandising got back to normal condition, the monetary system would unload a lot of pressure, thus strengthening the confidence of investors in bank stocks, Hiếu said.

According to securities firms and specialists, banks will grow stronger in  二0 二0 despite fears about the pandemic that have shaken global economies and most industries.

Economist Lê Xuân Nghĩa said that bank stocks were now cheaper than their actual values, so there was more room for growth in the short term.

Good performances in  二0 一 九, positive earnings forecasts for  二0 二0, and good business news are the factors that will boost bank stocks in the near future.

SHB reported a total profit of VNĐ 三.0 八 trillion (US$ 一 三 二 million) in  二0 一 九, a return-on-equity (ROE) ratio of  一 七. 五 六 per cent and a capital adequacy ratio (CAR) of  一 一. 七 per cent.

The bank was also able to buy back all the bonds it had sold to the Vietnam Asset Management Company (VAMC), proving its financial condition was healthier.

At VPBank, pre-tax profit in  二0 一 九 reached an historic high of VNĐ 一0. 三 三 trillion, beating its target by  九 per cent and increasing by  一 二. 三 per cent on-year.

VPBank also plans to launch an IPO for its consumer finance arm FE Credit, which contributed about  四 三 per cent of VPBank’s total  二0 一 九 profit.

At Sacombank, speculations are rife about the restructuring of the bank’s top positions, which would bring more cash and assistance.

An increase of foreign ownership in private-equity lenders under the EVFTA trade pact has been attributed to this growth.

Under the EVFTA, foreign investors from the European Union may now up their stakes in two private banks to  四 九 per cent.

The limit of foreign capital in local co妹妹ercial banks was  三0 per cent.

In addition, as local producers have stalled under pressure of the pandemic, they will need more capital to recover in the remaining months of the year.

The Government is calculating the impact of COVID- 一 九 on local businesses’ performance and studying potential solutions and stimulus packages.

A stimulus package worth VNĐ 三 一 五 trillion has recently been announced to support local firms by cutting interest rates, extending payment dates and slashing income taxes for businesses. — VNS