Will banks fulfill their "listing" target?

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MSB is expected to go public onHoSE later this year. Source: Internet

Urgent "race"

Less than threemonths until the deadline for banks to complete the listing plan as planned. However, according to statistics on the stock exchanges of the Ho Chi Minh Stock Exchange (HoSE), Hanoi Stock Exchange (HNX) and UPCoM, there are only 20 banks registered for trading. As such, it is still not possible to fill the total number of 31 joint stock commercial banks in Vietnam.

After many delays, banks are rushing to complete the listing procedures. Recently, on October 15, SGB shares of Saigon Industrial and Commercial Bank (Saigonbank) were listed on UPCoM with the number of 308 million shares, the reference price of 25,800 VND/share. Previously, in early October, more than 389 million NAB shares of Nam A Commercial Joint Stock Bank (NamABank) were traded on UPCoM with the first day's listing price at 13,500 VND/share. The total value of registered securities for trading is more than 3,890 billion VND, equivalent to the charter capital of the bank.

In July, Viet Capital Commercial Joint Stock Bank (VietCapitalBank) listed 317.1 million BVB shares on the UPCoM market, the reference price in the session was 10,700 VND/share andthe total transaction value reached 3,171 billion VND.

It is easy to see most of the banks listed recently are on UPCoM. Some experts said this could be a temporary solution or a response to the regulations because it is easier to list UPCoM than on the official exchange, when banks do not have to announce too much information orbusiness data, while financial statements are not too strict like the HoSE or HNX. However, at the end of this year, there are still banks that have registered to list shares on HoSE and HNX such as MSB of Vietnam Maritime Commercial Joint Stock Bank andOCB of Orient Commercial Joint Stock Bank.

Moreover, the Law on Securities 2019 takes effect from January 1, 2021, stipulating that, after twoyears from the first transaction date on the UPCoM system, a public company may submit an official listing application. Therefore, banks must also "race" to switch to the official exchange before this regulation takes effect. Typically, LVP (Lien Viet Joint Stock Commercial Bank - LienVietPostBank) andVIB (Vietnam International Commercial Joint Stock Bank) are examples of this.

Missed an appointment?

The year 2020 has been turbulent for the stock market in general. According to experts, although the market still received quite positive moves for banking stocks, both old and new, it helped banking stocks not fall deep in the "red", strongenough to support the whole market. However, in the face of the risk of the Covid-19 pandemic, it still suffers from considerable impacts.

In particular, MSB must be mentioned when the listing plan was launched in 2019, but after months of preparation, in May 2020, MSB announced it wouldwithdraw and postpone promotional activities for the listed on the stock exchange. The reason is the effects of the Covid-19 pandemic may lead to the starting price of MSB shares when transactionsare priced lower than its intrinsic value and not attract the attention of the gender of the professional investment and foreign investor. Therefore, the bank “restarted” its listing in early October. MSB plans to list more than 1.17 billion shares on the HoSE.

Similarly, OCB was also newly received by HoSE to list 876.7 million shares, corresponding to amarket value at par value of VND 8,767 billion. OCB is expected to go public this year after many delays from twoyears ago. The reason is also because this bank wants to wait for a favourable time for the market to go on the floor to ensure benefits for shareholders.

In fact, the concerns of MSB or OCB are not without foundation, when a "rookie" is SGB of Saigonbank in the early days after being listed, has "plunged", from the starting price of 25,800 VND/share, it is now about12,000-14,000 VND/share. Thus, SGB shares have lost nearly 50% of their value. However, this is also partly the reason the poor business results of Saigonbank, when accumulated nine months, the bank recorded a total operating income of more than 560 billion VND, a decrease of 7.6% over the same period, causing pre-tax profit to reach 177 billion VND, down 20% over the same period in 2019.

In the face of concerns about both objective and subjective conditions, many banks can and will definitely have to "make an error" with their listing plan this year. Le DucKhanh, director of analysis of PetroVietnam Securities (PSI) said that all banks want to minimize the "ripple" points on their financial statements so that they can go on the floor with a better price. Therefore, banks want to wait for better business times, when credit growth improves andbad debt stories are solved smoothly to make financial statements more "beautiful" before going on the floor.