BIDV listing to boost Vietnam stock market liquidity

Jan 20th at 11:05

20-01-2014 11:05:50+07:00

Bank for Investment and Development of Vietnam, the country’s second-largest lender by assets, is moving ahead with the nation’s biggest bank trading debut that may boost a market hindered by tight liquidity.

BIDV, as the state-run lender is known, will begin trading 2.81 billion shares on the Ho Chi Minh City Stock Exchange “very soon” with an initial price of 18,700 dong (89 cents) each, Senior Executive Vice President Tran Phuong said in an interview Jan. 17. The company will make a final decision on the listing date today, Phuong said. The company won’t be raising capital through the listing as the shares are already owned.

BIDV’s listing will help to boost the and liquidity of the VN Index, the nation’s benchmark and the best performing index in Asean markets last year. The listing, which may lure more foreigners to Vietnam’s $48 billion stock market, comes as the country looks to reshape its banking system that’s burdened with the highest rate of bad debt in Southeast Asia.

“The listing will add more depth to the market and broaden the choices for investors,” said Attila Vajda, head of institutional sales at ACB Securities Co. BIDV’s entry on the exchange “will add some transparency and increase efficiency” of the lender, he said.

The benchmark VN Index rose 22 percent in 2013, spurred by easing inflation and government efforts to tackle lenders’ bad loans. The gauge climbed for a 11th day through Jan. 17, adding 1.9 percent.

“The market has been rallying thanks to the improvement on the macro environment and this is a suitable time for listing,” Phuong said.

Listing Delay

BIDV sold a three percent stake in an initial public offering December 2011 and had planned to begin trading June 2012. The plan was delayed after a slide in the VN Index. (VNINDEX) Vietnam Export-Import Commercial Joint-Stock Bank previously held the nation’s biggest banking share debut in October 2009 when it listed 876 million shares.

In 2013, BIDV posted a pretax profit of about 5.2 trillion dong and is targeting at least 6 trillion dong this year, said Phuong. Bad debt ratio will be curbed at maximum of 2.6 percent compared with the estimated figure of 2.3 percent in 2013, he said. BIDV plans a dividend payout ratio of 8 percent to 9 percent in 2014, Phuong said.

The listing would raise the number of publicly-traded banks to six on the benchmark VN Index and nine nationally.

Vietnam’s economy grew 5.42 percent last year, faster than a 5.25 percent pace in 2012. The government predicts economic growth will accelerate to 5.8 percent in 2014. Vietnam banks have the highest rate of bad debt among the six Southeast Asian countries covered by Fitch Ratings, according to the company.

Exports jumped 15 percent last year from the previous year and the nation received $11.5 billion in disbursed foreign direct investment, a 10 percent increase from 2012, according to the General Statistics Office. Pledged FDI was $21.6 billion in 2013, a gain of 55 percent from a year earlier.

Policy makers set up an asset-management company to buy soured loans from banks in July. VAMC, as the entity is known, bought 39 trillion dong of bad debt from 35 lenders last year. The asset management company may purchase debts of as much as 150 trillion dong this year, central bank Governor Nguyen Van Binh said in December.

Bloomberg