"King" stocks back on track?

The Vietnamese stock market has just experienced a positive trading week. The VN-Index increased by more than 33 points, heading towards 1,290 - 1,300 points - the old peak in July 2024.

Some are happy, some are regretful

The positive stock market last week had a very positive contribution from large-cap bank stocks such as VCB, BID, CTG, ACB... This is a group of stocks that is highly appreciated by investors and experts thanks to its many growth prospects in the last months of the year.

According to the reporter of Nguoi Lao Dong Newspaper, bank stocks have performed positively in recent times, contributing to the recovery of VN-Index after the correction below 1,200 points in early August. In just one week, VietinBank's CTG stock increased from 30,000 VND to nearly 35,000 VND - an increase of 15% compared to the previous week. VCB, BID, LPB are also bank stocks with positive performance in the past week.

For investors holding NAB shares of Nam A Bank, the price has increased by about 30% since the bank distributed a 25% dividend in mid-July. Many investors regret selling these shares during the market downturn in mid-July and early August.

Many investors have kept faith in the group of bank stocks since the beginning of the year. Mr. Nguyen Viet - living in Ho Chi Minh City, an investor who has been participating in the stock market for nearly ten years - said that he still holds a lot of VPB shares of VPBank because he believes in the growth prospects of this bank. VPB shares have been moving sideways, accumulating for the past year, and if conditions are favorable, they will enter an uptrend. "All my friends have at least one bank stock code in their accounts such as SHB, OCB, VIB, TPB, with the expectation that there will be a wave after a long period of fluctuation in a narrow range" - Mr. Viet informed.

Bank stocks are considered "king" stocks due to their large capitalization and overwhelming number on the stock exchange, attracting the attention of many domestic and foreign investors. Ms. Tran Khanh Hien, Director of Analysis Department - MB Securities Company (MBS), said that bank stocks will be the focus of investment from now until the end of the year. The two factors of interest are credit growth and increased provisioning. Credit growth is likely to reach the target of 14% this year thanks to the increasing demand for capital following the economic recovery.

However, the ability to boost credit among banks will be strongly differentiated. Accordingly, banks with good asset quality and low bad debt ratios will have more room to lend. This is also clearly shown in the first 6 months of 2024 - some banks recorded double-digit credit growth, but there were also a few places that only disbursed 2% - 3% more loans compared to the end of 2023, along with a bad debt coverage ratio lower than 50% and a bad debt ratio above 3%.

Attractive pricing

According to Ms. Tran Khanh Hien, the banking industry's profits are forecast to increase by 20% and 30% in the third and fourth quarters of 2024, respectively, on the low base of the same period last year. This means that the valuation of bank stocks will reach an attractive level, encouraging investors to buy.

"The P/B valuation of the "king" stocks is currently only 1.5 times, lower than the average of the past 3 years. Bank stocks will be one of the focus sectors for investment stories in the last months of the year" - Ms. Hien commented.

Experts predict that banking stocks could be the focus of the stock market in the remaining months of 2024. Photo: HOANG TRIEU

Mr. Barry Weisblatt David, Director of Analysis - VNDIRECT Securities Company, also believes that banking stocks are one of two industry groups that offer good investment opportunities for the remaining period of 2024. Although the asset quality of some banks has recently declined, it will soon recover when the economy improves. Moreover, many laws related to the real estate market that take effect from August 1 will make it easier for banks to record the value of mortgaged assets.

"Expectations of strong credit growth, exceeding the State Bank's target of 15%, will boost banks' income. In particular, when the US Federal Reserve (FED) cuts interest rates, it will help reduce pressure on the USD/VND exchange rate, thereby reducing the risk of interest rates rising. Banks are trading at attractive P/B levels compared to the 5-year average," said Barry Weisblatt David.

Regarding bad debt, Mr. Quan Trong Thanh, Director of Analysis Department - Maybank Securities Company, said that the total bad debt of 17 listed banks increased by 6% in the second quarter of 2024. The bad debt ratio by the end of the second quarter of the banking system was 1.97%. Overdue debts mainly come from small and medium-sized enterprises in the trade, steel and retail sectors due to mortgage lending and consumer finance, causing bad debt to increase.

"The bad debt position of banks seems to be significantly lower than concerns. Compared to banks in the region (such as Thailand, Indonesia), this bad debt ratio is not too high. In fact, 11 domestic banks still have an acceptable bad debt ratio" - Mr. Thanh analyzed.

Deposit interest rates are still on an upward trend.

A recent banking industry update report by Maybank Securities Company shows that the recent increase in interbank interest rates has had a spillover effect on deposit interest rates. Many banks have switched to mobilizing more deposits from customers, instead of relying on borrowing capital on the interbank market.

Maybank experts forecast that deposit interest rates will increase by 0.5 percentage points from now until the end of the year due to increased credit growth. This increase is reasonable and will not have a major impact on banks and the economy in terms of capital mobilization costs.

However, according to some financial experts, the net interest margin of banks will not be able to improve in the remaining quarters of this year. Because input interest rates have increased, but lending interest rates have not kept pace with this increase and will remain at the current level, in the context of management agencies and banks trying to support businesses in accessing capital sources.

Source: https://nld.com.vn/co-phieu-vua-tro-lai-duong-dua-196240825184927166.htm