Problems, central bank cure cause Vietnam bank stocks to lose sheen

TN News

Email Print

The outlook for banking stocks is bleak because of the problems plaguing banks and the tough measures imposed on them by the central bank, a securities company has warned.

Bank stocks rose 18 percent last year, BIDV Securities Company said in a report, but now they face problems due to falling profits, restrictions on dividend payouts, and organizational changes.

Overall bank profits fell by half last year to VND28.6 trillion (US$1.37 billion), news website VnExpress reported.

BSC forecast difficulties to continue this year.

Lending rates are set to drop to boost the economy, hitting profits further, it added.

Lower dividend yields are expected as a result, and the report said there is also concern about delays in dividend payouts because the State Bank of Vietnam late last year prohibited banks from paying dividends until they make adequate provisions for bad debts

Bad debts rose to 8.82 percent of loans as of last September, according to central bank governor Nguyen Van Binh.

Apart from making risk provisions, the central bank has also been urging banks to restructure.

Since late 2011 there have been the mergers of Habubank and SHB and SCB, Ficombank, and TinNghiaBank, and restructuring at Techcombank, TienPhongBank, and Agribank.

Last week Sacombank and Eximbank announced a merger.

More mergers are expected soon.

"Organizational changes" as part of the restructuring process also threaten to make bank stocks less attractive.

The outlook for the stocks would not improve until banks completely "deal with" bad debts and restructure, the report said.

Like us on Facebook and scroll down to share your comment

More Business News