Experts forecast bright prospects for bank shares, which will bring the giants back to the position of richest people on the stock market.
When bank shares break the ice
In the past few weeks, bank stocks with such pillars as CTG, VCB, STB and BIDV have suddenly surged. The "waves" of bank stocks have made investors more excited with new highs. Other small bank stocks have also jumped.
Typically, the state-owned banks’ shares surged more than 100%. Nguyen Trung Quan, an investor, said: "In just six months of investing in bank shares, I have earned more than double. Compared to the recent highest deposit rate of 8.2%/year, the profit from the increase in stock price is equal to the profit of depositors in 14-15 years."
Other bank stocks are also attracting the market and receiving a huge influx of money. SHB shares increased by nearly 60%; MBB, ACB, Sacombank increased by over 40%. The return of many stocks in the market back to the "golden age" makes many investors regret not buying these stocks.
In particular, the transaction volume of STB shares increased many times, reaching over 13 million units with the value of thousands of billion VND. Some experts said that if bank restructuring activities continue, bank stocks will play a leading role in the VN Index.
ACB is back on the track as the top bank. The Sacombank’s reform plan after merging a weak bank has been approved in 2017 make the market fear that STB share will slip. However, Sacombank's leaders affirm that “Sacombank is not a weak bank. We are just implementing a post-merger restructuring project. As a result, the bank's share price is still in a rising wave.
With new mechanisms, the process of bank restructure will be accelerated, helping this group of shares not fall behind. Some banks also have policies to increase capital and to list on the stock market. The increasing liquidity and expanding market with improving transparency will make bank shares to be more attractive. The move of raising capital to meet Basel II standards also helps banks scale up. Vietcombank plans to increase its capital to nearly VND40 trillion. The figures for BIDV, CTG, Sacombank, MB and Techcombank are nearly VND39 trillion, VND37 trillion, nearly VND19 trillion, VND18 trillion and VND14 trillion respectively.
Back to the throne?
The surge of bank shares after years of losing its throne is a positive sign to the market, bringing great expectations to the investors.
On June 21, the National Assembly passed a resolution on handling bad debt to motivate bank stocks, leading to the rise of the VN Index to new highs. Representatives of a bank said that the disposal of collateral assets has been beyond the expectations of credit institutions. Previously, the stock was frozen due to the postpone of handling collateral assets.
Securities analyst Phan Dung Khanh explained that there are many reasons for this sharp increase. The first is due to the expectation of economic growth drives up businesses’ need of capital from banks. The second reason is the expectation for the growth of the banking industry in general and the optimistic forecast for the industry prospects.
Financial expert Duong Anh Vu said that the leading stocks such as VCB, CTG, BID, STB all give a significant profit ratio of 10-50%. It can be seen that the warming real estate market is a good opportunity to break the bad debt. Banks with large provisioning ratios such as EIB, STB will obviously be beneficial in this case. "So investors can continue to trust bank stocks. However, it is important to consider stocks with good fundamentals as not all stocks are profitable." Vu advised.
A study published by Viet Dragon Securities has shown that there are still some growth drivers in the bank sector. Credit growth throughout 2017 is likely to be higher than the target of 18% set earlier this year. Some banks set a very high growth rate, promising high loan income, which means that the interest income of banks will increase.
Most of bank stocks are attractive to the market. Before that, many closed trades of the tycoon make many investors suspect. The phenomenon of pouring cash flow into the bank shares is considered quite unusual. Internal changes in banks as well as favorable developments in terms of environment and policy are bringing positive outlook for the stock group.
Money flowing into bank shares was mainly due to expectations of positive outlook of this group and more appropriate mechanisms to deal with bad debt. The high credit growth rate together with the plan to promote economic growth and industry prospects in the near term also helps banks stocks regain the status of "the king stock."