What are the opportunities for bank stocks?

The VNFINLEAD index – which includes leading banking and financial stocks – experienced a sharp decline today (November 11), bringing the index back to the price levels seen in the latter half of September.

The VNFINLEAD index – which includes leading banking and financial stocks – experienced a sharp decline today (November 11), bringing the index back to the price levels seen in the latter half of September.

Leading financial and banking stocks decline in price.

Today, only 2 out of 23 stocks in the VNFINLEAD index rose in price: VCI and NAB. The remaining stocks were in the red, with the index losing more than 2% at times. At the close of trading on November 11th, the VNFINLEAD index fell 1.67% to 2,056.15 points, erasing all gains from the past nearly two months.

Bank stocks fell across the board on November 11th, with CTG, BID, and STB becoming the three stocks dragging the index down the most throughout the session. During the ATC session, trading in CTG recovered, escaping the group of stocks weighing down the index, closing the session down only 0.14%.

Conversely, VCB managed to maintain its positive momentum for most of the trading session, but the ATC order at the end of the session caused VCB to reverse and fall by 0.22%.  

Red dominated the banking and financial sector stocks.

In contrast to the banking and finance sector, the materials and technology sectors saw significant gains during the session, helping to mitigate the index's decline.  

Liquidity on the HoSE was higher than in the past two weeks, but mainly came from sellers. The VN-Index fell 0.18% today, dropping to 1,250.32 points.

Do bank stocks still have room for further price increases?

A recent assessment by Rong Viet Securities (VDSC) indicates that the stock market is currently at a fairly attractive discount. However, there are still short-term headwinds to watch out for, such as geopolitical conflicts that may trigger short-term risk aversion among investors, and the potential for an initial strengthening of the USD following the Trump administration's election.  

Therefore, VDSC recommends that investors prepare for a scenario of "taking advantage of market downturns to build long-term positions," especially in the banking, real estate, technology, industrial, and service sectors.

VDSC recommends increasing the weighting in the banking sector as opportunities for revaluation remain ahead.  

Pre-tax profits of listed banks in Q3 2024 increased by 17.0% year-on-year but decreased by 8.3% compared to the previous quarter. This result was weaker than previously expected, mainly due to a narrowing Net Interest Margin (NIM). A positive aspect of the Q3 business results is that non-performing loans have almost peaked at most major banks, while provisions for credit risk have not increased. VDSC expects NIM in Q4 2024 to stabilize at its current low level due to competitive lending pressures.  

Statistics from this securities firm also indicate that the valuation of the banking sector has remained virtually unchanged after a decade.  

Valuations in the banking sector have remained virtually unchanged for a decade. Source: Bloomberg, Fiinpro, VDSC

The industry-wide P/B valuation is currently 1.5x, showing little change since the beginning of 2023 and remaining below the 5-year average since May 2022. This suggests the market is still discounting asset quality risks for the banking sector as profits are recovering more steadily.  

In addition, the major story of upgrading to secondary frontier market status according to FTSE standards will remain a noteworthy highlight over the next year for the banking sector, which is based on its largest market capitalization, VDSC stated.

Source: https://baodautu.vn/co-hoi-nao-cho-co-phieu-ngan-hang-d229734.html