Banks pursue listing plans in 2011

Several banks are still pursuing their plans for listing on bourse despite the dreary outlook for the capital market this year, saying the move is aimed to ensure liquidity for their shareholders.

DongA Commercial Bank, Techcombank, and Military Bank are among credit institutions that are finalizing procedures to get listed in 2011, but they will await the most favorable conditions to join the equity market.

DongA Commercial Bank at a recent shareholders meeting sought approval to list on the bourse this year, but its management stressed that the bank would scrutinize the stock market’s movement before deciding a point of time.

DongA last year aborted a plan to get listed, having prepared necessary procedures for the move like revising its charter and issuing its governance regulations. The bank said the cancellation of its listing last year was due to upheavals on the stock market when shares of several banks had dropped to below the face value.

Similarly, Military Bank also dropped its plan for listing in 2010. However, the bank has determined to float shares on bourse this year.

Military Bank on April 27 received approval from the HCM City Stock Exchange for its listing. Le Van Be, vice chairman of the bank, told local media that the bank would list on the bourse within 75 days upon its general meeting on April 28.

Le Cong, CEO of Military Bank, added that the bank had appointed Thang Long Securities as its listing advisor and is preparing road shows to introduce the bank’s shares to investors. If everything is smoothened out, the bank can get listed on the southern bourse within the second quarter this year.

The bank expects to find strategic investors after listing on the bourse under the code of MBB. This year, it also plans to spur chartered capital from VND7.3 trillion to VND10 trillion by issuing shares to existing shareholders and strategic partners.

Meanwhile, Techcombank, one of leading joint-stock banks in Vietnam, emphasizes that listing is one of three biggest targets of the bank this year besides increasing profit and total assets.

Techcombank said in a statement that listing on the stock market would strengthen its prestige and brand recognition among local and foreign investors, improve the stock’s liquidity, enhance benefits for shareholders as well as establish a channel providing transparent information to the market.

Bank stocks still not attractive in short term

Despite these banks’ determination to join the equity market this year, experts have pointed out that bank stocks have now lost their reputation on the market given strained banking regulations coupled with difficulties in the local economy.

According to a report of Vietnam Asset Management (VAM), the average 2011 price per earning ratio (PE) of bank stocks on the two exchanges in Vietnam is expected at 10.9 times, higher than the whole market’s average ratio of 9.6 times. That can partly explain why bank stocks are not attractive for investors.

A report of Viet Dragon Securities Co. (VDSC) said the local stock market last year saw two more banks trading shares on the Hanoi Stock Exchange, namely Nam Viet Commercial Bank (NVB) and Habubank (HBB), besides five others already listed. The two new players now have their stocks trade below the face value.

At this time, stocks of seven banks on the two exchanges account for 20% of the whole market’s capitalization. By the end of 2010, listed banks’ average after-tax profits increased by 23%, but this profit growth last year was still lower than their average growth on equities of over 26% and total assets of about 40%.

“Bank stocks have not seen positive signs in the short term and will be hard to attract individual investors if there is now supporting news,” VDSC said.- SGT

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial