Banks report huge profits, bank shares’ golden days return

Bank shares' golden days return

In 2017 Vietnam commercial banks reported huge profits of trillions of dong. As expected, with advantage in huge assets, three state-owned banks were the most profitable banks in 2017.

Of these, Vietcombank was the most profitable with pre-tax profit of VND11.3 trillion, an increase of 32 percent compared with the same period in 2016.

The second position belonged to VietinBank which reported profit of VND9.206 trillion, an increase of 8.9 percent.

With profit of VND8.8 trillion, which means a 14 percent increase, BIDV is in the third position in the entire banking system.

Sacombank made the biggest leap in 2017 with profit increasing by 9.5 times to VND1.488 trillion.

As banks all have reported big profits, the bank share price increase was expected. The average price of the shares of 13 banks being traded at the Hanoi & HCMC Stock Exchanges and UpCom (not including Bac A Bank which put its shares into transactions on December 28, 2017) has increased by 60 percent.

Even NVB, the shares of National Citizen Bank, which were traded at prices below nominal value for many years, also saw strong rise with prices hitting ceiling levels at many trading sessions.

NVB price exceeded the VND10,000 threshold in mid-June. The price of the share later went down for some time in 2017, but it still increased sharply by 58 percent by the end of 2017.

Similarly, SHB of the Saigon – Hanoi Bank also sees steady rise. It had a bad beginning in 2017 when its price stayed at VND4,000 per share. However, the price had soared to VND9,300 per share by the end of 2017, or 97 percent within a year.

Other banks, Military Bank and Asia Commercial Bank, also saw impressive share price increases of 84 percent and 71 percent, respectively.

Can Van Luc, a renowned banking expert, commented that investors have realized the great growth potential of the banking sector and are trying to pour money into bank shares.

“The stock market is growing well, the restructuring of banks and bad debt settlement accelerated after the release of new resolutions,” he explained.

Le Xuan Nghia, an economist, also thinks the banking system now has opportunities for recovering.

In 2016, the ROE of the whole banking system was at around 7 percent, while the figure rose to 11 percent in 2017. At some banks, the ROE is 20 percent.

US$1=VND22,000