Bank stocks expected to break out thanks to capital increase 'push'

DNVN - The fact that major banks such as BIDV, Vietcombank, Agribank and VietinBank are accelerating their charter capital increases not only strengthens their financial health but also creates positive expectations for the stock market, in the context of increasing bad debt.

The race to increase capital among state-owned commercial banks is attracting market attention. Specifically, BIDV plans to issue more than 1.19 billion shares to pay dividends at a rate of 21%, thereby increasing its charter capital from VND57,000 billion to nearly VND69,000 billion. This move helps BIDV maintain its position as the bank with the largest charter capital in the state-owned banking sector, surpassing Vietcombank, VietinBank and Agribank.

Vietcombank has also received approval from the National Assembly to add more than VND20,600 billion from stock dividends, raising its charter capital to over VND83,500 billion. Meanwhile, Agribank and VietinBank are also gradually implementing plans to increase capital to strengthen their financial capacity and ensure safety against bad debt risks.

Major banks increasing charter capital creates positive expectations for the stock market, in the context of increasing bad debt.

According to the State Bank's report, by the end of September 2024, the industry's on-balance sheet bad debt ratio was at 4.55%, equivalent to the previous year. Increasing charter capital through stock dividends is considered the optimal solution to increase equity strength and improve the capital adequacy ratio (CAR).

In addition, the banking sector development strategy to 2030 aims to have 2-3 Vietnamese banks among the top 100 largest banks in Asia. To achieve this goal, state-owned commercial banks are forced to increase capital to meet the needs of sustainable development and maintain credit growth.

Experts believe that increasing capital will create a safety buffer for the banking system in the context of many economic fluctuations. Dr. Ho Sy Hoa - Research Director of DNSE Securities Company, emphasized that increasing charter capital is a necessary condition for large banks to participate in restructuring weak credit institutions under the direction of the Government.

Mr. Truong Minh Phuong Duy - stock analyst at SSI has a positive assessment of stock dividends. This plan helps banks maintain credit growth of 13% - 14% next year, while creating a foundation to reduce provisioning costs.

In the stock market, bank stocks are still a bright spot, despite the VN-Index moving sideways with low liquidity. Currently, Vietcombank's VCB shares are trading around VND93,000, BIDV's BID is around VND46,700 and VietinBank's CTG is at VND36,000/share. Investors expect capital increases to boost bank stock prices, creating momentum for the stock market to recover.

Dr. Ho Sy Hoa forecasts that the banking industry could achieve a profit growth rate of 15.3% in 2024, with continued positive prospects. Large banks such as BIDV, Vietcombank and VietinBank are forecast to lead the entire industry's stocks, thanks to stable credit growth and improved asset quality.

With prudent lending policies, especially limiting risks from real estate, large banks are expected to continue to maintain their pivotal role, contributing to economic development and strengthening investors’ confidence in the stock market. Increasing capital, paying dividends and improving financial capacity will be the main driving forces to help banks maintain growth momentum in the coming period.

Duy Loc

Source: https://doanhnghiepvn.vn/kinh-te/ky-vong-co-phieu-ngan-hang-but-pha-nho-luc-day-tang-von/20241217102725346