Forecast of banking industry stocks at the end of the year

Hello expert, I am a retail investor, joining the market for about two years. The investment portfolio always has some codes with long-term expectations and some other codes for short-term surfing. I am interested in banking industry stocks.

Recently, the National Assembly passed a resolution at its 8th session, approving the policy of investing additional state capital to maintain the state capital contribution ratio at Vietcombank with an amount of more than 20,695 billion VND from stock dividends. state shareholders’ distribution from the remaining profits. I would like to ask experts, what impact does this have on the banking industry, the industry’s stocks as well as investors?

Thu Hang
(28 years old, Hanoi)

Consulting expert:

The National Assembly passed the resolution at its 8th session, approving the policy of investing additional state capital to maintain the state capital contribution ratio at Vietcombank with an amount of more than 20,695 billion VND from dividends divided by shares of Vietcombank. State shareholders from the remaining profits. This is a necessary condition for this bank to have enough resources to support the restructuring of weak credit institutions assigned by the Government and the State Bank, ensuring system safety, contributing to healthy development. and industry stability.

However, in the case of increasing capital by paying dividends from retained profits, this is an effort to strengthen buffers for banks in the context of the increasing bad debt trend (industry-wide on-balance sheet bad debt ratio at the end of September/ 2024 at 4.55% – according to SBV announcement) – this is the equivalent level at the end of 2023 and 2022.

Banks are a group of stocks with large capitalization, one of the influential pillars in the market. With large banks such as Vietcombank, VietinBank, and BIDV expected to pay high dividends and increase charter capital, the banking industry will maintain positive growth momentum in the late 2024 period.

In early 2025, the banking industry will continue to benefit from the economic recovery and credit support policies from the State Bank. Increasing capital and paying dividends will help banks have more resources to continue supporting businesses and the economy, as well as supporting the restructuring of weak credit institutions. In addition, the current valuation of the banking industry is only 1.5 times – lower than the industry’s recent 5-year average of 1.7 times.

However, in the context of economic recovery, the banking industry also needs to pay attention to bad debt risks, especially when credit loans will increase. Banks with good risk management capabilities will be the preferred choice of investors.

I assess that banking stocks are still a potential industry group. Banks with high profitability ratios and strong financial foundations will continue to attract investor attention and lead the banking industry stock market.