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Vietnam's OTC-traded bank shares too cheap for purchases

Lack of disclosed information, listing plans and risks of non-performing loans are dragging OTC-traded bank stocks down.



Orient Commercial Joint Stock Bank (OCB) is among the banks still traded on the Over-The-Counter (OTC) market, which is a decentralised and less transparent trading platform. — Photo



Seven banks are trading shares on the Over-The-Counter (OTC) market, which is decentralised and less transparent as it is subject to fewer regulations and dealers can set the prices for buying and selling a security, currency and other financial products.

That already makes shares of those banks riskier and less attractive to investors because they are not bound by any regulations regarding information disclosure.

The seven banks include the Orient Commercial Joint Stock Bank (OCB), Maritime Commercial Joint Stock Bank (MSB), Dong A Bank, Bao Viet Commercial Joint Stock Bank (BaoVietBank) and Viet A Bank.

Among those, only MSB and Viet A Bank have published their 2019 first-half financial reports, which are the references for investors that are keen on purchasing the bank shares.

Other banks have not updated their quarterly and annual financial reports, annual reports and business profiles.

According to analysts, this is understandable because those banks are not obliged to publicise their financial reports as they are not traded on the three common stocks markets – which are Ho Chi Minh Stock Exchange (HoSE), Ha Noi Stock Exchange (HNX) and Unlisted Public Company Market (UPCoM).

In addition, investors are unwilling to trade OTC bank shares because banks often miss their listing plans while putting banks on the common stocks markets is a must-do for the banking sector.

Meanwhile, investors worry about the non-performing loans (NPL) or bad debt ratios because they have recorded a high growth of credit and lending this year, Dien dan Doanh nghiep (Enterprise News) newspaper cited individual investor Nguyen Hung as saying.

According to financial-banking specialist Nguyen Tri Hieu, bank stocks have not performed well lately because the stock market has been struggling with external factors from international markets.

OCB shares traded between VND14,500 (US$0.62) and VND15,200 per share on Thursday. MSB shares ranged between VND10,200 and VND11,100 per share, and Viet A Bank shares moved between VND3,200 and VND3,800 per share.

OTC banks’ trading volume was between 10,000 shares and one million shares on Thursday.

Meanwhile, trading volume of common bank stocks was maximum 6.14 million shares on Thursday. Their share prices were between VND7,100 and VND82,000 per share.

In recent months, bank shares are not an attractive target for investors because they still have some bad assets, NPLs are increasing and unsettled, and other financial indicators are unreliable, Hieu said.

“There are many professional and experienced investors on the market like investment funds, financial firms and lenders, who are very aware of the strength of the banking sector. When they undervalue bank shares, it means the undervalued banks barely have bright future,” he said. — VNS


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