HDBank, a good stock for investment

Friday, Jan 12, 2018 09:30

Nguyen Dong Tien, deputy governor of the State Bank of Viet Nam, speaks on listing day for HD Bank on Jan 5.

With HDBank listing 981 million shares on the HCM Stock Exchange on Jan 5, the Vietnamese market now has another quality stock for investors.

On the first day of trading, HDB gained 20 per cent to reach the ceiling price of VND39,600 (US$1.75).

Volumes topped 32.3 million, with foreign investors snapping up more than five million shares.

The bank's strong growth outlook is what makes the stock highly attractive to investors.

Prior to its market debut, HDBank, formally known as the HCM City Development bank, had increased its chartered capital to VND9.8 trillion.

Last month it raised more than $300 million by selling a 21.5 per cent stake to 76 foreign investors, including from the UK, Hong Kong, the US, Japan, Singapore, South Korea, and Australia.

The remaining 8.5 per cent of the bank’s shares open for foreigners to buy is making HDB a buy when other listed banks have no further room for foreign investors.

Another factor is that HDBank has become well-known thanks to the high profile of its board, which includes deputy chairwoman Nguyen Thi Phuong Thao, who is also the founder of no-frills airline Vietjet Air, and chairwoman Le Thi Bang Tam, who also chairs Vinamilk — the largest firm by market cap on the Vietnamese stock market.

On the first day of trading of HDB, Thao said: "We have built a foundation for the 2017-2021 plan which includes annual targets of 25 per cent growth and 37 per cent growth in profits and serving 15 millions customers by 2021.

"In the last 10 years HDBank's total assets have grown 18-fold and we believe in our ability to grow the assets another 2.5-fold by 2021 in addition to keeping the lowest bad debt ratio in the whole [banking] sector."

Speaking on the listing day, deputy governor of the State Bank of Viet Nam, Nguyen Dong Tien, said HDBank is a successful case of the country's banking sector reforms in 2012-2015.

HDBank has done a remarkable job to become one of the top banks in the country, he added.

"Being the first credit institution to list on HoSE in 2018 not only marks a new chapter for HDBank, but also reaffirms its leaders' commitment to work towards transparency and ensuring the best interests of its customers, which is also in the best interests of the market, its investors, and shareholders."

HDBank's successful listing on the stock market and status as one of the largest firms by market cap has created a positive outlook for the country's financial system and reaffirmed its attraction to international investors, he said.

Established in 1990, merged with Dai A Bank in 2013 and buyer of France’s Société Générale Viet Finance, HDBank has become among the largest lenders in Viet Nam.

As of December 2017 the bank had total assets worth more than VND191 trillion and capital in excess of VND15 trillion.

Its pre-tax profit last year was VND2.42 trillion following a 110 per cent jump from 2016.

It has a low bad debt ratio of 1.1 per cent, which rises to 1.5 per cent if non-performing loans (NPLs) at its retail financial company HD Saison are taken into account.

Even during the dark days for the financial system a few years ago the bank always ensured it paid a 10 per cent dividend to its shareholders.

Recently it announced a cash dividend and bonus payout of 25-30 per cent at this year shareholders meeting.

HDBank targets 26 per cent growth in assets annually for the next five years with total assets rising to $20 billion and return-on-equity of 26 per cent.

It also does not rule out the possibility of more M&A deals in the near future.

HDbank has garnered many domestic and international awards, including the award for “Best Cash Managing Bank in Viet Nam” from AsiaMoney Magazine for five straight years (2012-16) and "Best Managed Company in Asia" award in 2015 and 2016 from British magazine Euromoney.

Moody’s Investors Service assigned HDBank a first-time credit rating of B2 with a stable outlook for 2016.

HDBank has been named among the 500 strongest banks in the Asia Pacific region and among the best commercial banks in Viet Nam by the Asian Banker.


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