VN banking industry’s valuation higher than regional peers

The valuation of the Vietnamese banking industry is relatively high compared to other regional countries, according to Military Bank Securities Company (MBS).

A VietinBank office in Hà Nội. The valuation ratio of the Vietnamese banking industry will become more attractive as banks continually increase charter capital. VNA/VNS Photo

The valuation of the Vietnamese banking industry is relatively high compared to other regional countries, according to Military Bank Securities Company (MBS).

News portal cafef.vn quoted a report on the banking industry released recently by MBS, showing that the price to earnings ratio (P/E) of the Vietnamese banking industry by the end of last month was 13.02, significantly higher than other regional countries, such as Indonesia (11.9), Singapore (11.8), Thailand (9.3), China (4.7) and South Korea (3.9).

The price to book value ratio (P/B) of the Vietnamese banking industry is also considerably higher than the P/B of the countries listed by MBS, at 2.26 compared with 0.90 of Indonesia, 1.10 of Singapore, 0.70 of Thailand, 0.40 of China and 0.40 of South Korea.

With positive news about the charter capital increase of Vietnamese banks, MBS believes the valuation ratio of the Vietnamese banking industry will become more attractive.

According to MBS, in addition to promoting products and services, the capital increase will also help banks enhance strength and competitiveness besides better risk management.

By the end of last year, the Vietnamese banking system was supplemented with more than VNĐ33 trillion of charter capital, helping the country have 18 banks recording charter capital of more than VNĐ10 trillion each.

Many banks have continued big plans to increase capital this year. VietinBank is currently the leader in terms of charter capital with VNĐ48.05 trillion, followed by BIDV, Vietcombank, Techcombank and Agribank.

According to MBS, with the State Bank of Việt Nam (SBV)’s requirement on the capital adequacy ratio (CAR), domestic commercial banks will have to continuously take measures to increase their charter capital next year. Under the SBV’s regulation, by January 1, 2023, banks’ CAR must meet the Basel II standards prescribed in Circular 41/2016/TT-NHNN. Up to now, 16 out of 35 banks have met the CAR requirements according to Circular 41.

Besides meeting the SBV’s CAR requirement, the capital hike will also contribute to strengthening the financial capacity for banks and increasing banks’ medium- and long-term capital to expand business operations when the ratio of short-term funds used for medium- and long-term loans is also tightened by the SBV.

Therefore, MBS forecast the race to increase capital of banks will continue strongly in 2022 to help banks further expand their business operations, enhance governance and financial capacity, improve asset quality and increase profitability in association with risk management.

Related to lending, as credit demand is increasing after the economy reopened in the last quarter of 2021, MBS expected the banking industry to achieve a credit growth of about 13 per cent in 2021, equivalent to the growth rates in the previous years. — VNS

Source: VNA
vietnamnews.vn

Related News

Latest News

Strictly monitor market fluctuations to appropriately adjust prices

Strictly monitor market fluctuations to appropriately adjust prices

VCN – In the second quarter and the remaining months of 2024, the price management and administrations need to effectively control inflation and remove difficulties for production and businesses, the Ministry of Finance reports.
Closely monitoring market fluctuations to consider appropriate time to adjust prices

Closely monitoring market fluctuations to consider appropriate time to adjust prices

VCN - According to a report from the Ministry of Finance, in the second quarter and the remaining months of 2024, price management and administration need to ensure good control of inflation and continue to remove difficulties for production and business.
How does the Land Development Fund work effectively?

How does the Land Development Fund work effectively?

VCN - Speaking at the Conference to collect opinions on the draft Government Decree regulating the Land Development Fund held by the Ministry of Finance on April 22, Deputy Minister of Finance Bui Van Khang emphasized the necessity of the development of the Government Decree regulating the Land Development Fund.
Vietnam seeks to remove obstacles in upgrade of securities market

Vietnam seeks to remove obstacles in upgrade of securities market

The State Securities Commission of Vietnam (SSC) recently held an online working session with the World Bank (WB) and the Asia Securities Industry and Financial Markets Association (ASIFMA) to discuss ways to remove obstacles related to criteria for upgrading the Vietnamese securities market.

More News

Price stability from supply increase and transparency in trading in gold market

Price stability from supply increase and transparency in trading in gold market

VCN - To stabilize the gold market, economic expert Prof.Dr. Tran Tho Dat, a member of the Prime Minister's Economic Advisory Group, said that it is necessary to implement solutions to make all transactions transparent in the gold market, implement electronic invoices as well as pay taxes in gold investment activities.
SBV takes more actions to stabilise foreign exchange rates

SBV takes more actions to stabilise foreign exchange rates

The State Bank of Vietnam (SBV) on April 23 took some moves like issuing treasury bills (T-bills), further employing T-bills as an open market operation (OMO), and stipulating liquidity and interest rates in the inter-bank market in the face of surging USD/VND exchange rates.
Proposal to exclude criminal liability for tax officials when businesses provide false information to refund VAT

Proposal to exclude criminal liability for tax officials when businesses provide false information to refund VAT

VCN - The revised Draft Law on Value Added Tax (VAT), besides inheriting many provisions from the current Law, also revises and supplements several contents to suit the actual situation, including some notable contents in VAT refund.
Corporate bond maturity in 2024 remains high: MoF

Corporate bond maturity in 2024 remains high: MoF

The volume of corporate bonds maturing in 2024, though lower than that in 2023, is till at a high level, mostly in industries with payment risks such as real estate and renewable energy, according to a report by the Ministry of Finance (MoF).
Support clearance procedures for imported gold for bidding

Support clearance procedures for imported gold for bidding

VCN - The State Bank (SBV) has sent a document to competent ministries and branches requesting coordination in implementing the Prime Minister's direction in gold market management.
The exchange rate will gradually cool down from the end of the second quarter of 2024, while interest rates will remain low

The exchange rate will gradually cool down from the end of the second quarter of 2024, while interest rates will remain low

VCN - According to forecasts, Vietnam's financial sector in 2024 will be more positive, with the exchange rate gradually cooling down from the end of the second quarter of 2024, while interest rates will remain low to promote growth.
Majority of credit institutions forecast profit growth in 2024

Majority of credit institutions forecast profit growth in 2024

A total of 86.2% of credit institutions expect their profit this year to grow compared to 2023, according to the latest survey of the State Bank of Vietnam (SBV).
Central bank plans to auction gold bars on April 22

Central bank plans to auction gold bars on April 22

The State Bank of Vietnam (SBV) will auction SJC-branded gold bars on April 22, a representative of the central bank said on April 19.
Old loans must endure higher interest rates temporarily: central bank

Old loans must endure higher interest rates temporarily: central bank

The average lending interest rate for new loans by commercial banks is reported at around 6.4% per year, a decrease of 0.7 percentage point per year compared to the end of last year. However, borrowers with loans issued before the latest rate adjustment still must pay higher rates, according to the State Bank of Vietnam (SBV).
Read More

Your care

Latest Most read
Strictly monitor market fluctuations to appropriately adjust prices

Strictly monitor market fluctuations to appropriately adjust prices

VCN – In the second quarter and the remaining months of 2024, the price management and administrations need to effectively control inflation and remove difficulties for production and businesses, the Ministry of Finance reports.
Closely monitoring market fluctuations to consider appropriate time to adjust prices

Closely monitoring market fluctuations to consider appropriate time to adjust prices

VCN - According to a report from the Ministry of Finance, in the second quarter and the remaining months of 2024, price management and administration need to ensure good control of inflation and continue to remove difficulties for production and business.
How does the Land Development Fund work effectively?

How does the Land Development Fund work effectively?

Deputy Minister of Finance Bui Van Khang emphasized the necessity of the development of the Government Decree regulating the Land Development Fund.
Vietnam seeks to remove obstacles in upgrade of securities market

Vietnam seeks to remove obstacles in upgrade of securities market

The State Securities Commission of Vietnam (SSC) recently held an online working session with the World Bank (WB) and the Asia Securities Industry and Financial Markets Association (ASIFMA) to discuss ways to remove obstacles related to criteria for upgrading the Vietnamese securities market.
Price stability from supply increase and transparency in trading in gold market

Price stability from supply increase and transparency in trading in gold market

VCN - To stabilize the gold market, economic expert Prof.Dr. Tran Tho Dat, a member of the Prime Minister's Economic Advisory Group, said that it is necessary to implement solutions to make all transactions transparent in the gold market, implement electr
Mobile Version