[Vnbiz] Exchange in Vietnam lists bank

[Phan, Tai]

Exchange in Vietnam lists bank  
By Jason Folkmanis Bloomberg News

Published: July 12, 2006
 
 
HO CHI MINH CITY Vietnam's stock exchange received a boost Wednesday as shares of one of the nation's two biggest non-state-controlled banks began trading, the first lender to list on the six-year-old bourse.
 
Saigon Thuong Tin Commercial Joint-Stock Bank, or Sacombank, finished the first trading session on the Ho Chin Minh City Securities Trading Center little changed at 78,000 dong, $5.09, giving the firm a market value of $927 million. The 40 other companies traded there have a combined value of about $1.84 billion.
 
The move by Sacombank, which counts Australia & New Zealand Banking Group, among its shareholders, is a "landmark" for the bourse, according to Merrill Lynch, as regulators overcome concerns about fragile local confidence in banks to allow easier investor access to one of the fastest-growing industries in one of Asia's fastest-growing economies.
 
"People are looking at Sacombank as an experiment," said Dominic Scriven, a director of Dragon Capital in Ho Chi Minh City, manager of the Dublin-listed Vietnam Enterprise Investments fund that owns about 9 percent of Sacombank. "If it's successful, the banks will be dominant on the exchange within the next couple of years."
 
Shares of Ho Chi Minh City-based Sacombank had previously changed hands over the counter at about 79,000 dong apiece. The stock will only trade in the first the day's three trading sessions.
 
Vietnam's economy grew 8.4 percent last year, the fastest pace since 1996. The government is aiming for similar annual growth to 2010 in a bid to boost per- capita income to about $1,100 from $640 and move the nation out of the ranks of the world's lower-income countries.
 
Vietnam's "banking system has grown significantly in the past decade, but remains quite small," said Fitch Ratings in a March report. Banking system assets were about $40 billion, the report said, roughly three-quarters of which were controlled by the country's four biggest state-owned banks.
 
Sacombank's assets reached 14.5 trillion dong last year, up 39 percent from a year earlier, and rose to 18.9 trillion dong by May of this year, according to a summary prepared by the bank for potential investors. Revenue last year rose 45 percent to 1.21 trillion dong, while net profit rose 55 percent to 234 billion dong, the bank said.
 
"Lending has grown rapidly, yet credit quality has been well controlled," Sacombank said, citing average annual loan growth of 42.5 percent between 2000 and 2005 and a non-performing- loan ratio of less than 1 percent.
 
Australia & New Zealand paid $27 million in 2005 for 10 percent of Sacombank, a stake that has more than tripled in value since then, based on Sacombank's over-the-counter price.
 
The Ho Chi Minh City Securities Trading Center's VN Index has jumped 64 percent this year, reaching a record high of 632.69 on April 25 and closing Tuesday at 504. The share surge was sparked in part by listing of higher- profile companies and by anticipation that the bank shares may attract more foreign investment into the market.
 
"The market is way overvalued, but the high valuations are a catalyst that are bringing more liquidity into the market," said Chris Freund, managing director of Mekong Capital in Ho Chi Minh City. "Everything's heading in the right direction." 
 
 HO CHI MINH CITY Vietnam's stock exchange received a boost Wednesday as shares of one of the nation's two biggest non-state-controlled banks began trading, the first lender to list on the six-year-old bourse.
 
Saigon Thuong Tin Commercial Joint-Stock Bank, or Sacombank, finished the first trading session on the Ho Chin Minh City Securities Trading Center little changed at 78,000 dong, $5.09, giving the firm a market value of $927 million. The 40 other companies traded there have a combined value of about $1.84 billion.
 
The move by Sacombank, which counts Australia & New Zealand Banking Group, among its shareholders, is a "landmark" for the bourse, according to Merrill Lynch, as regulators overcome concerns about fragile local confidence in banks to allow easier investor access to one of the fastest-growing industries in one of Asia's fastest-growing economies.
 
"People are looking at Sacombank as an experiment," said Dominic Scriven, a director of Dragon Capital in Ho Chi Minh City, manager of the Dublin-listed Vietnam Enterprise Investments fund that owns about 9 percent of Sacombank. "If it's successful, the banks will be dominant on the exchange within the next couple of years."
 
Shares of Ho Chi Minh City-based Sacombank had previously changed hands over the counter at about 79,000 dong apiece. The stock will only trade in the first the day's three trading sessions.
 
Vietnam's economy grew 8.4 percent last year, the fastest pace since 1996. The government is aiming for similar annual growth to 2010 in a bid to boost per- capita income to about $1,100 from $640 and move the nation out of the ranks of the world's lower-income countries.
 
Vietnam's "banking system has grown significantly in the past decade, but remains quite small," said Fitch Ratings in a March report. Banking system assets were about $40 billion, the report said, roughly three-quarters of which were controlled by the country's four biggest state-owned banks.
 
Sacombank's assets reached 14.5 trillion dong last year, up 39 percent from a year earlier, and rose to 18.9 trillion dong by May of this year, according to a summary prepared by the bank for potential investors. Revenue last year rose 45 percent to 1.21 trillion dong, while net profit rose 55 percent to 234 billion dong, the bank said.
 
"Lending has grown rapidly, yet credit quality has been well controlled," Sacombank said, citing average annual loan growth of 42.5 percent between 2000 and 2005 and a non-performing- loan ratio of less than 1 percent.
 
Australia & New Zealand paid $27 million in 2005 for 10 percent of Sacombank, a stake that has more than tripled in value since then, based on Sacombank's over-the-counter price.
 
The Ho Chi Minh City Securities Trading Center's VN Index has jumped 64 percent this year, reaching a record high of 632.69 on April 25 and closing Tuesday at 504. The share surge was sparked in part by listing of higher- profile companies and by anticipation that the bank shares may attract more foreign investment into the market.
 
"The market is way overvalued, but the high valuations are a catalyst that are bringing more liquidity into the market," said Chris Freund, managing director of Mekong Capital in Ho Chi Minh City. "Everything's heading in the right direction."