Want to be in the loop?
subscribe to
our notification
Business News
FOUR BANK SHARES TO GAIN MAXIMUM 68 PER CENT IN 12 MONTHS: JP MORGAN
Shares of four Vietnamese banks may rise 14-68 per cent in 12 months, according to JP Morgan’s Asia Pacific Equity Research.
The New York-based financial institution said in its research that the Vietnamese banks “offered an increasingly rare combination of high and self-sustaining earnings growth."
“This, with a favourable credit cycle, should lead to significant multi-year returns,” the US bank reported early this month.
In addition, high visibility on nominal gross domestic product (GDP) and current account surplus allows “extrapolation of strong earnings and credit growth in Việt Nam.”
JP Morgan rated shares of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the Vietnam Technological and Commercial Joint Stock bank (Techcombank) and the Asia Commercial Joint Stock Bank (ACB) at over weight and the Vietnam Prosperity Joint Stock Commercial Bank (VPBank) at neutral.
The banks under JP Morgan’s coverage are expected to deliver 15-21 per cent return-on-equity (RoE) ratios in the next two years as “they have started making money on both sides of the balance sheet.”
JP Morgan also highlighted favourable cyclical positioning as a defining feature of the Vietnamese banking system, which managed asset quality problems well in 2012-13.
It spoke highly of the creation of the Vietnam Asset Management Company (VAMC), which “provided a five-year timeline to write off bad debt” and allowed banks to grow sustainably through being funded against VAMC bonds.
Vietcombank, Techcombank, ACB and VPBank were forecast to record a 12 per cent earnings compound annual growth rate (CAGR) for 2019-21 on the back of a 16 per cent loan CAGR and a 6-13 basis point net interest margin (NIM) compression, as competition in retail loans should crimp yields.
JP Morgan warned the four banks’ stock of capital would appear low at a 12.2 per cent capital adequacy ratio (CAR) as they were “transitioning from Basel 1 to Basel 2.”
Meanwhile, high RoE, limited dividend payout rates of 0-17 per cent and reasonable risk-weighted asset growth of 13-19 per cent would ensure capital needs are met.
In addition, credit penetration at 104 per cent of the revised GDP is high, according to JP Morgan, due to “leverage build-up at State-linked companies with low capital efficiency” and a higher consumer leverage that would limit growth and lead to non-performing loans (NPLs).
Other risks JP Morgan pointed out include Moody’s placing 17 banks under review for a possible credit rating downgrade due to delayed Government payments, the foreign exchange depreciation lowering USD returns for investors, and the US Treasury’s watch over Việt Nam for possible status as a currency manipulator.
Source: VNS
Related News
VIETNAM’S GDP TO GROW 5.5% THIS YEAR – WB
This forecast is based on the assumption of a moderate recovery in manufacturing exports in 2024, fueled by rebound growth of 8.5% year-on-year in the fourth quarter of 2023 and 17.2% year-on-year in the first quarter of 2024, reflecting strengthening global demand, said Dorsati Madani, senior country economist at the WB in Vietnam.
FARE REFUND FOR VISA REJECTION
Cathay Pacific will offer full refunds for cases of visa rejection to provide you with the confidence to explore the world with ease. If you are planning to fly to a destination that requires an entry visa, you can now book with greater peace of mind.
FOUR COMMODITIES POST Q1 EXPORT VALUE OF OVER 5 BILLION USD
The total export turnover of agricultural, forestry, and fisheries products in the first three months of 2024 is estimated to reach 13.53 billion USD, an increase of 21.8% compared to the same period of 2023.
MOIT PROPOSES SCHEME TO BOOST RENEWABLE ENERGY PROCUREMENT
The proposed Direct Power Purchase Agreement (DDPA) mechanism, outlined in the draft decree, targets organisations and individuals consuming electricity from the 22kV power grid or higher, with a monthly consumption averaging 500,000kWh. However, residential households are excluded from direct procurement.
REAL ESTATE BONDS PLACE PRESSURE ON ISSUING FIRMS
The ministry’s recent report underscores concerns within Vietnam’s corporate bond market for 2023 and 2024. It emphasizes the critical need to address hindrances to the real estate sector in line with the objectives provided in Government Resolution No. 33/NQ-CP, which aims to stabilize the industry.
DA NANG CUSTOMS FOCUSES ON DEVELOPING CUSTOMS-BUSINESS PARTNERSHIPS
Da Nang Customs Department issued an action plan for developing customs-business partnership in 2024. One of the new events this year is the workshop on “Settlement reports for enterprises engaged in outsourcing, export production and export processing” held in Da Nang Customs Department on April 16, 2024.