Banking stocks tipped to lead growth in 2022

2022 is full of positive factors for banking stocks on Vietnam’s stock market, according to Mr. Le Anh Tuan, Director of Investment Planning at Dragon Capital Vietnam.

Credit is forecast to improve in 2022 while bad debts will fall sharply, with the average profit in the whole industry predicted to rise 30 per cent compared to 2021, he explained. Moreover, certain banks are strategically selling capital, as profits rise from sales in exclusive insurance deals and more space is made available for foreign investors.

Bank leaders have announced business plans for 2022 with a high degree of optimism. Private banks such as MSB, OCB, ACB, and VPBank are looking at growth of 20-30 per cent based on rising credit and non-interest income. State-owned banks, meanwhile, have set profit targets more than 15 per cent higher than in 2021.

The research team at BSC Securities assessed that the banking industry has positive prospects in 2022.

Credit demand will continue to grow at a high level, of about 14 per cent, supported by Vietnam’s continued economic recovery post-pandemic and an estimated support package of VND350 trillion ($15.33 billion) being implemented over the next 2-3 years. Credit growth was 13.53 per cent in 2021 thanks to sound disease control and economic recovery.

BSC also believes that NIM will increase by 0.35 percentage points in 2022 compared to 2021 due to three factors: high credit growth thanks to economic growth, lending rates recovering after the support period, and an increased CASA structure that helps banks cut capital costs.
In general, BSC expects banking industry growth to come in at 22.2 per cent, thanks to the post-pandemic recovery and a low base in 2021.

With such prospects, analysts believe that banking stocks will lead the stock market this year, though price growth may be lower than in 2021. Valuations are still attractive, with an average P/E of 16x and a P/B of 2.1x.