BIDV listing likely in early 2014, value may deter investors

BIDV submitted documents to be approved for a listing license from the exchange (HOSE) last October. According to the Ho Chi Minh Securities Corporation (HSC), once it gets the green light the bank would need three months of preparation, and therefore there is a high likelihood the bank will list in early 2014.

BIDV is one of Vietnam’s top banks with a current charted capital of VND28.11 trillion ($1.33 billion).

Compared to other top banks, including Vietcombank and Vietinbank, BIDV reported strong business results in the first nine months of this year. It saw pre-tax profits of more than VND4 trillion ($193 million), 86 per cent of the annual target. Its bad debt ratio stans at 2.34 per cent, 0.61 per cent below that of the second quarter.

Vietcombank and Vietinbank’s non-performing loans increased in third quarter this year from 2.4 to 2.98 per cent and from 1.46 to 2.46 per cent, respectively.

The HSC forecast BIDV would take in profits of VND4.3 trillion ($202.4 million) this year, a 9 per cent on-year increase and 90 per cent of the year plan. It estimated the lenders credit growth at 17 per cent with bad debts of 2.5 per cent.

In its initial public offering (IPO) in December 2011, just under 85 million shares were bought at an average price of VND18,483 per share. The bank plans for the debut price to at least match 1.5 times its IPO value.

“If it achieves this price level, the expected price-to-book ratio of BIDV will be 1.54x in 2013 and 1.42x in 2014, rather expensive compared to the average of listed banks, 1.2x. If BIDV really wants to list at the IPO price, it will be very difficult for the bank to attract investors,” the report concluded.