In line with the growing trend of banking stocks, National Citizen Commercial Joint Stock Bank (NCB, HNX: NVB) was one of the most impressive gainers on the stock market. Given its plan to raise capital at the beginning of the year, NVB shares are expected to become one of the hottest banking stocks this year.
Net profit from the operating activities of NCB increased more than two times on-year
Statistics show that NVB produced one of the most positive movements in the stock market. Since September 2020, NVB shares have continuously maintained an upwards momentum of more than 70 per cent in value. Its share price has peaked at nearly VND16,000 (69.56 US cents) per share. Also, NVB was among the stocks that foreign investors were net buying on the Hanoi Stock Exchange (HNX) at VND300 billion ($13 million) in the first two months of 2021.
Factors stimulating the impressive increase of NVB shares
The impressive growth of NVB shares is attributed to the bank’s stable, efficient, and sustainable business performance despite the negative impacts of the COVID-19 pandemic.
Specifically, NCB's consolidated financial statements showed that net profit from operating activities of the bank increased more than two times on-year. Accumulated for the whole year of 2020, this figure was VND850 billion ($36.96 million). Total assets reached VND90 trillion ($3.9 million), up 11.5 per cent against the beginning of the year.
Besides stimulating business activities, NCB focuses on improving its operations towards efficient and sustainable development. In the past year, NCB has achieved a capital adequacy ratio according to Basel II standards as prescribed in Circular 41 by the State Bank of Vietnam. NCB is completing documents to ask the State Bank for approval to apply and carry out Basel II in accordance with regulations.
Furthermore, NCB makes efforts to boost market and operational risks as well as credit quality control. Despite concerns about the banking sector's bad debts due to the COVID-19 pandemic, thanks to stringent credit quality control, by the end of 2020, the non-performing loan (NPL) ratio of NCB remained below 2 per cent.
Continue to pass its peak
Financial expert Nguyen Tri Hieu forecast that Vietnam's stock market will continue to rise in 2021 with banking stocks to outperform.
Banking stocks will continue to outperform in 2021
His view is in line with the results of the banking sector in 2020. Specifically, despite the global health crisis, banks also achieve positive profits last year. Meanwhile, the non-performing loans (NPL) ratio remains at a low level.
"During the pandemic, the banking sector has been stable and is expected to continue to stand firm in the coming time, contributing to the growth of banking stocks this year," Hieu added.
Looking at the leading stocks of various industries, experts said that banking stocks still play a key role in the market due to its good fundamentals and large market capitalisation. Thus, banking stocks that are still below their potential such as NVB are expected to continue to make a breakthrough in 2021.
NCB has a safe and sustainable development strategy with impressive business results and a low NPL ratio. There is one factor to bring a positive impact on NVB shares in the coming time. Specifically, NCB will offer 150 million shares to existing shareholders in the first and second quarter of 2021 with the offering price of VND10,000 (43.5 US cents) per share. The total offering value is equivalent to VND1.5 trillion ($65.2 million). The bank also plans to issue 3,000 convertible bonds separately in 2021 with par value of VND1 billion ($43,480) each.
With additional capital through the sale of additional shares to the public and the separate issuance of convertible bonds, NCB will improve its financial capacity, creating strong growth momentum for itself.
“This is good news. Increasing capital will lay a foundation for NCB to develop strongly in the near future. It will also help NCB's shares continue to break through in 2021," Hieu emphasised.