Hoang Huy, head of Equity Research at Ho Chi Minh City-based KIS Vietnam Securities Corporation, with price-per-earnings ratio averaging 17.1x, the VN-Index hovers in an attractive pricing zone to investors in the context listed firms anticipate a 20% jump in their profit throughout the year.
Of the tickers, those in banking, real estate, and consumer goods sectors appear most promising during the rest of the year.
Bank tickers are even expected to lead the market upward trend.
In Huy words, lending rate tending to go up will help improve the net interest margin (NIM) in banks’ lending, meanwhile banks have reported rising incomes from service segment amid lower needs for provisioning.
In fact, total operating income of 16 listed banks jumped 28% in the year’s first half.
According to VPBank Securities JSC, in the first half this year listed banks saw 53.7% jump on-year in their post-tax profit. The sharp rise in their non-interest income helped banks post a buoyant first-half performance which is expected to continue in the rest of 2018.
For the whole year, analysts expect listed banks could post a 30% on-year jump on their post-tax profit, a positive factor to their tickers’ price movement.
Bank tickers show strong volatility in price in this year’s first half. The tickers jumped impressively by 35.9% in the first quarter and shed 33.7% in the second quarter. In the first half, bank tickers generally hiked 0.74%, higher than 3.51% plunge of VN-Index, showing the lead role of the tickers.
According to banking expert Can Van Luc, the banking sector’s profit growth comes from three following motivating factors.
First, banks’ NIM ratio inched up to 3.16% presently from 3.05% one year ago; second, their non-interest incomes rose sharply in the wake of surging fees, their increased cross-selling of products and robust bancasurrance activities; and third is their lessened needs for making provisioning.
Ho Chi Minh City commercial lender Eximbank is an eminent example. The parent bank’s second - quarter post-profit hiked 38% on-year whereas its consolidated profit jumped 54% on-year.
Generally, Eximbank’s first-half profit doubled 2017’s similar period, reaching VND921 billion (US$40.7 million).
The bank’s lending revenue hiked an average 14% in the second quarter, whereas its first-half provisioning cost sank 84% thanks to its efforts in collecting bad debts.
Bad debt ratio (including the debts sold to state-owned Vietnam Asset Management Company-VAMC) of listed banks plunged to 3.67% by end of June 2018 compared to 4.04% by the end of 2017.
The move, according to securities analysts’ assessments, came by virtue of the enforcement of National Assembly’s Resolution 42/2017/QH14 on pilot application of breakthrough measures to tackle bad debts of credit institutions as well as the real estate market warming-up helping banks to solve their mortgages.