VietNamNet Bridge - It seems that the heyday of bank shares has returned as capital from domestic and foreign investors is flowing into the banking sector.

Vietcombank shares have seen prices increasing in the last six months from VND40,000 per share to VND55,000. This helped the bank obtain a good price in selling 7.73 percent of its stakes to Singaporean GIC.

With value of $400 million, this is one of the most impressive deals of the year. 

GIC is one of the world’s largest investment funds with $344 billion put under its management. However, the fund’s returns have declined in recent years as a result of the slowdown in developed markets. 

The heavier investment in emerging markets with high potential like Vietnam shows changes in the fund’s capital allocation strategy.

Besides Vietcombank, GIC is also holding a 6 percent of stake in FPT, the largest Vietnamese information technology group, and 7.96 percent of Vinasun taxi. 

More surprisingly, GIC is a big shareholder of PAN with 4.95 percent of PAN shares. 

GIC’s investment portfolio in Vietnam is diverse with capital in many different business fields, from agriculture and finance to infrastructure.

Other Vietnamese banks have also attracted foreign investors. VP Bank has successfully called for $125 million worth of capital from IFC.

It seems that the heyday of bank shares has returned as capital from domestic and foreign investors is flowing into the banking sector.

IFC holds 4.99 percent of TP Bank shares. 

Earlier this year, Dragon Capital acquired 64.2 million Military Bank shares in hopes that the banking sector would prosper. 

Bill Stoops from Dragon Capital said banks would push up lending in 2016 which would bring better profit. He believes bank share prices would increase further.

Some years ago, Vietnam witnessed the first wave of foreign investors injecting money into domestic banks. 

Bank of Tokyo Mitsubishi UFJ spent $743 million to acquire 20 percent of VietinBank shares, while Mizuho Bank bought 15 percent of Vietcombank shares and Sumitomo Mitsui Banking Corporation got 15 percent of Eximbank.

However, the profitability of the investment deals might not satisfy foreign investors as the bank share prices have not gone up since then, except Vietcombank shares.

This could be, according to analysts, the reason why GIC was cautious in the deal to buy Vietcombank shares this time. The price it accepted to pay was low, or half of the market price.

Foreign investors have every reason to be cautious with bank shares. The latest report showed a decrease in the NPL ratio, but Q2 reports of some banks showed an increase in NPL value.

BIDV, for example, saw the NPL go up from 1.6 percent in late 2015 to 2 percent by the end of June.


Chi Mai