Banks hesitate over joining stock exchange

Illustration photo - source:sacombank

The Military Bank (MB) got the nod from the State Bank of Vietnam (SBV) to be listed on Ho Chi Minh City Stock Exchange (HoSE) in the second quarter of 2010.

However, as the Vietnamese stock exchange continually finished in the red and the price of most shares, including those of banks, fell sharply in the second half of 2010, MB, like many other banks, had decided to postpone their listings.

“We will get our shares listed on the bourse in an appropriate time. However, if the market continues to be unfavourable, listing will not be a top priority for the bank’s business strategy in 2011,” said MB’s deputy general director Cao Thi Thuy Nga.

MB is one of banks with good growth potential. In 2010, the bank reaped more than VND2 trillion ($100 million) in pre-tax profits, exceeding its projections and reported a return-on-equity (ROE) rate of around 30 per cent, a high-level compared to the bank sector’s average.

As with Dong A Bank, the plan to list shares on the bourse was approved by shareholders and the management for around two years. Bank’s leadership also viewed listing as important to help raise the stock’s liquidity. However, in light of current gloomy market conditions bank executives said getting on the bourse was not a smart option.

For the Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the bank outlined a plan to list shares on the southern bourse in its 2009 business strategy, said Techcombank’s deputy chairman Nguyen Thieu Quang.

However, it later delayed the listing plan due to poor market conditions.

“Whether the bank will list shares on the stock market in 2011 depends on actual market performance,” said Quang.

He also said the bank had basically fulfilled 2010 business targets with around VND2.8 trillion ($140 million) in pre-tax profits and unveiled 2011 pre-tax profit target of over VND4 trillion, which would be submitted for appraisal in the forthcoming 2011 shareholders’ conference.

Techcombank has experienced phenomenal growth in both profits and operational network in recent years. In 2010 alone, the bank opened 94 new transaction offices and recruited 2,400 new employees to expand operations.

In recent talks with Vietnam Investment Review, most banks said they viewed listing on the stock market as important to raise stock’s liquidity and promote their brands. They also hoped the move would help them mobilise sufficient capital for business expansion. However they said getting listed on the stock market at an appropriate time was crucial.

The banking sector saw the shares of one member, the Hanoi Building Commercial Joint Stock Bank (Habubank), fall below their face value when debuting on the Hanoi Stock Exchange in November 2010.