Vietnam banks' earnings outlook ‘relatively positive’: PYN Elite Fund

The Q3/2024 earnings growth of Vietnam’s listed companies will likely settle around 20-30% and banks’ earnings outlook for the next 12 months is also relatively positive, said the Finland-based PYN Elite Fund.

“We expect strong results from several of our banks, above the stock market's average earnings growth,” PYN Elite portfolio manager Petri Deryng commented in a recent note.

Banks are still trading at very low valuations relative to their earnings growth and historical valuation multiples. However, investors' interest has recently started to rise, and several brokers have given new buy recommendations for the banking sector, he added.

In an investor note last month, PYN Elite said its portfolio's 50% allocation to Vietnamese banks represented a significant strategic investment as local banks tend to achieve a sector-specific and quite substantial rally in cycles of a few years.

It cited historical data as saying that the banks’ earnings continued to grow even during Vietnam's lackluster stock market years, while more cyclical businesses faced several earnings surprises.

Banks took five spots in the fund’s top 10 holdings as of September. They were Sacombank (STB), MBBank (MBB), TPBank (TPB), VietinBank (CTG), and HDBank (HDB), all listed on the Ho Chi Minh Stock Exchange (HoSE). Also, the three top movers during the month were TPBank, Sacombank, and VietinBank.

HoSE data showed that banks accounted for half of the 10 largest blue chips at the close on Monday, namely Vietcombank (VCB), BIDV (BID), VietinBank (CTG), Techcombank (TCB), and VPBank (VPB).

Petri Deryng added in the note that the National Assembly, which is responsible for the country's budget, key appointments, and legislative changes, has made significant additions to next year's budget, especially to public investments. Additional investments can be up to 30% compared to the previous planning. Despite the new investments, public debt is estimated to remain at a very moderate level of 36-37% of GDP.

“The large government investment spending also bodes well for the investments of the private sector and the growth in the domestic demand, especially as the same time global economic growth still looks vulnerable,” he added.