VietNamNet Bridge - While foreign finance institutions believe that Vietnamese bank shares prices are the most expensive in frontier markets, Vietnamese shareholders are distressed that bank share prices have not increased as expected.

Bloomberg has reported that the share prices of three of Vietnam’s largest banks have increased by 62 percent so far this year. The newswire reported that BIDV bank shares have been offering the best price in the stock market. 

The bank’s bad debt ratio is now just 1/6 of that of three years ago, while the bank has pushed up lending to fund real estate purchases.

BIDV shares of the bank, which has the second biggest capitalization value in the market, has increased by 90 percent so far this year. Meanwhile, Vietcombank share price has increased by 50 percent and VietinBank by 47 percent.

The P/E (price on earning) index of BIDV is 12.3, while it is 25.2 for Vietcombank and 13.2 for VietinBank.

Commenting about the P/E index, a Vietnamese analyst said that the P/E is ‘ too high’, and if the information is true, Vietnamese bank shares would be unattractive in investors’ eyes.

However, the analyst commented that ‘bank shares have reasons to increase in prices’ and that bank shares are getting more expensive because the national economy is warming up. 

He cited a recent report of the State Bank of Vietnam as saying that the non-performing loan (NPL) ratio of the whole banking system has fallen to 3 percent.

Bloomberg quoted Dragon Capital and Maybank Kim Eng Securities as showing positive prospects about investments in Vietnamese bank shares. 

Dragon Capital’s Bill Stoop believes that Vietnamese banks would accelerate disbursement in 2016 and earn fatter profits in the year, and therefore, bank share prices would continue rising.

Meanwhile, local newspapers all reported that bank share prices have been staying at low levels because of the low demand.

Nguoi Dong Hanh reported that OCB and SCB shares offered by the Debt and Asset Trading Company (DATC) at just less than VND5,000 per shares cannot be sold. 

The shares of the Military Bank, one of the best banks in Vietnam, are traded at VND12,000-15,000 per share. Meanwhile, Sacombank, after the merger deal with Phuong Nam Bank, now sees its shares traded at VND12,000 per share.

Nguoi Dong Hanh reported that Vietcombank has seen its share price going up to VND48,000 per share, but said that this is because investors heard Vietcombank may be allowed to increase the foreign ownership ratio ceiling. 

Meanwhile, with the very high P/E of 25-27, Vietcombank shares are not an attractive share for investors to inject money in. The website even commented that it would be more reasonable if Vietcombank share prices drop by 50 percent.

Kim Chi