Banking shares plummet to attractive prices

Customers at Vietcombank (VCB) branch in the Central Highlands province of Kon Tum (Photo: VNA)

Hanoi (VNS/VNA) - The banking industry may have a hard time reaching its 2022 profit growth targets, but share valuations have dropped significantly to attractive prices.

In the past three months, banking shares witnessed sharp declines and were among the most negatively impacted on the stock market. Most banking stocks decreased by over 30% and there was no single bank seeing positive growth.

The decline was attributed to stricter control of credit flows, increasing bad debts mainly caused by real estate businesses, corporate bond inspection at banks and inflationary pressure which have affected investor sentiment.

However, after a series of deep declines, many banking stocks are rebounding strongly in recent sessions. This brings hope to many investors in this industry group.

In a newly released report, FiinGroup said that the total operating income of 27 listed banks in the first quarter of 2022 increased by 8.2% compared to the previous quarter. Compared to the same period last year, total operating income increased by 22.2% and only three banks recorded a decline, the others grew positively.

Net income from services decreased by 12.1% compared to the previous quarter after increasing sharply in Q4 of 2021, but still up by 14% compared to Q1 of 2021. The high quarter-on-quarter growth of the remaining activities came from other activities ( 83.3%), foreign exchange ( 21.7%), while income from securities dropped sharply (-52.7%).

Profit after tax of 27 listed banks increased by 51% compared to the previous quarter and up by 31% compared to the same period in 2021.

Non-performing loans are gradually increasing and may continue to rise in the coming quarters as banks gradually shift restructured debts to the right debt groups. FiinGroup believes that this will put pressure on some banks, especially those with low NPL coverage ratios and not enough provisioning. Meanwhile, banks that have actively made provisions with a high NPL coverage ratio will not be of concern./.