JP Morgan's Harsh Modi said on Monday that the Vietnamese banking the sector is still an excellent opportunity for rearing growth and generating significant capital for interested firms and institutions.
According to CNBC, Modi, the co-head of Asia ex-Japan for financials research at the the global investment bank explained that Vietnam's banking sector is a a rare combination of fast growth and capital generation for profits.
Modi pointed out that banks in the Asian country have shown capability in sustaining high levels of growth even if they don't get constant capital for long periods. "The return is higher than the balance sheet growth," he noted.
Compared to the banking sectors in other countries, Vietnam's has been attracting investors around the world due to their ability to sustain themselves for a longer period without putting their stocks at the lower end of multiples.
Vietnam is experiencing stabilizing macroeconomic factors that are also driving bullish remarks and forecasts from financial institutions and industry analysts. JP Morgan is currently overweight in Asia Commercial Bank, Techcombank, and Vietcombank.
While there are also some relevant opportunities throughout the rest of Southeast Asia, JP Morgan noted that Vietnam is above the rest due to more stable potential in the banking industry.
Meanwhile, the State Bank of Vietnam recently decided to limit rolling out loans to the real estate sector in efforts to ensure sustainability as well as the security of the overall Vietnamese banking sector.
According to Viet Nam News, the new policy will take effect on January 1 and will see the state bank reducing the ratio of short-term loans to 30 percent from the current percentage of 40 by September 2022.
Risk ratios will also be applied to mortgages of up to 150 percent from the existing 50 percent. Industry experts warned that the move will most likely have a negative impact on the property sector.
Industry analysts argued that the real estate market has already gone through a lot over the past months, and the move of further pressuring lending interest rates will have a negative impact on market liquidity.
In other news, Vietnamese banks were awarded late last month for the Vietnam Outstanding Banking Awards 2019 in Ho Chi Minch City. The awards were handed out by the International Data Group (IDG) and the Vietnam Banks Association.
Among the awardees were the Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) and the Joint Stock Commercial Bank for Investment and Development (BIDV), which won the Outstanding Retail Banking Award alongside the Military Commercial Joint Stock Bank (MB Bank).
