Are "king" stocks back on track?

The Vietnamese stock market just experienced a positive trading week. The VN-Index rose by more than 33 points, heading towards 1,290 - 1,300 points - the previous peak in July 2024.

Some rejoice, others feel regret.

The positive performance of the stock market last week was significantly contributed by large-cap banking stocks such as VCB, BID, CTG,ACB , etc. This group of stocks is highly valued by both investors and experts due to its promising growth prospects in the remaining months of the year.

According to reporters from Nguoi Lao Dong Newspaper, bank stocks have performed positively recently, contributing to the recovery of the VN-Index after the correction to below 1,200 points in early August. In just one week, VietinBank 's CTG stock surged from around 30,000 VND to nearly 35,000 VND – a 15% increase compared to the previous week. VCB, BID, and LPB were also among the bank stocks that performed positively last week.

For investors holding shares of Nam A Bank (NAB), the price has increased by approximately 30% since the bank distributed a 25% dividend in mid-July. Many investors regret selling their shares during the market downturn in mid-July and early August.

Many investors have maintained their faith in bank stocks since the beginning of the year. Mr. Nguyen Viet, a resident of Ho Chi Minh City and an investor with nearly a decade of experience in the stock market, said he still holds a significant amount of VPB shares of VPBank because he believes in the bank's growth prospects. VPB's share price has been consolidating sideways for the past year, and it only needs favorable conditions to enter an upward trend. "All my friends have at least one bank stock in their accounts, such asSHB , OCB, VIB, TPB, hoping for a surge after a long period of fluctuation within a narrow range," Mr. Viet stated.

Bank stocks are considered "king" stocks due to their large market capitalization and overwhelming number on the exchange, attracting the attention of many domestic and foreign investors. Ms. Tran Khanh Hien, Director of Analysis at MB Securities (MBS), believes that bank stocks will be the focus of investment from now until the end of the year. Two key factors are credit growth and increased provisions for bad debts. Credit growth is likely to reach the target of 14% this year thanks to increased capital demand driven by the economic recovery.

However, the capacity to boost lending among banks will be significantly differentiated. Accordingly, banks with good asset quality and low non-performing loan ratios will have more room to lend. This is also clearly demonstrated in the first six months of 2024 - some banks recorded double-digit credit growth, while others only disbursed an additional 2% - 3% of loans compared to the end of 2023, accompanied by a non-performing loan coverage ratio of less than 50% and a non-performing loan ratio above 3%.

Attractive pricing

According to Ms. Tran Khanh Hien, banking sector profits are projected to increase by 20% and 30% in the third and fourth quarters of 2024, respectively, building on the low levels of the same period last year. This means that bank stock valuations will reach attractive levels, encouraging investors to buy in.

"The P/B valuation of the 'king' group of stocks is currently only 1.5 times, lower than the average of the last three years. Bank stocks will be one of the focal sectors for investment in the last months of the year," Ms. Hien commented.

Experts predict that bank stocks could be the focus of the stock market in the remaining months of 2024. Photo: HOANG TRIEU

Mr. Barry Weisblatt David, Director of Analysis at VNDIRECT Securities Company, also believes that banking stocks are one of the two sectors offering good investment opportunities for the remainder of 2024. Although the asset quality of some banks has recently deteriorated, it will soon recover as the economy improves. Furthermore, several laws related to the real estate market, effective from August 1st, will make it easier for banks to recognize the value of collateral assets.

"Expectations of strong credit growth, exceeding the State Bank's 15% target, will boost bank earnings. In particular, the US Federal Reserve's interest rate cut will ease pressure on the USD/VND exchange rate, thereby reducing the risk of rising interest rates. Banks are currently trading at attractive P/B ratios compared to the 5-year average," assessed Barry Weisblatt David.

Regarding bad debts, Mr. Quan Trong Thanh, Director of Analysis at Maybank Securities Company, stated that the total bad debts of 17 listed banks increased by 6% in the second quarter of 2024. The bad debt ratio of the banking system at the end of the second quarter was 1.97%. Overdue debts mainly come from small and medium-sized enterprises in the trade, steel, and retail sectors due to mortgage lending and consumer finance, which contribute to the increase in bad debts.

"The non-performing loan (NPL) situation of banks appears to be significantly lower than feared. Compared to banks in the region (such as Thailand and Indonesia), this NPL ratio is not too high. In fact, the 11 domestic banks still have an acceptable NPL ratio," Mr. Thanh analyzed.

Deposit interest rates continue to trend upwards.

A recent banking sector update report by Maybank Securities shows that the recent surge in interbank interest rates has had a ripple effect on deposit rates. Many banks are shifting towards attracting more deposits from customers, instead of relying on borrowing in the interbank market.

Maybank experts predict that deposit interest rates will increase by 0.5 percentage points from now until the end of the year due to slightly increasing credit growth. This increase is reasonable and will not significantly impact banks or the economy in terms of the cost of capital mobilization.

However, according to some financial experts, the net profit margin of banks will not be able to improve in the remaining quarters of this year. This is because while input interest rates have increased, lending interest rates have not kept pace with this increase and will remain at the current level, as regulatory agencies and banks strive to support businesses in accessing capital.

Source: https://nld.com.vn/co-phieu-vua-tro-lai-duong-dua-196240825184927166.htm