Vietnam banks may gain next year on higher rates, Manulife says

[phuocpham]

Vietnamese banking stocks are set for a “good year” in 2010 as higher interest rates increase profits, according to Mark Canizares, head of equities at Manulife Vietnam Fund Management.
Vietnam’s central bank this month raised its benchmark interest rate by one percentage point to 8 percent, the first rate adjustment since February, amid signs economic growth is accelerating.
The benchmark VN-Index fell for a second straight day, trimming 1.6 percent, to 434.87, the lowest since July 23, after the State Bank of Vietnam on Wednesday denied speculation that it would inject funds into the banking system.
“We still remain positive” on banking stocks, Canizares said in an interview on Bloomberg Television Wednesday. “The rate increase would also allow them to have higher lending, which would help their net interest margin.”
Ho Chi Minh City-based Manulife, which has about US$280 million of assets under management, expects “the bigger banks to have a good year next year, despite the fact that credit growth would most likely slow down,” Canizares said.
Joint-Stock Bank for Foreign Trade of Vietnam, Vietnam Bank for Industry & Trade, and Asia Commercial Bank, the country’s three largest listed companies, have all increased deposit interest rates to raise more funds to meet higher loan demand.
Consumer, property companies
Growth may rise to 6.8 percent in the fourth quarter, up from 5.8 percent in the previous three months, Prime Minister Nguyen Tan Dung said on December 3 in Hanoi.
Consumer and property company stocks will also be “positive” next year, according Canizares. He cited Vietnam Dairy Products Joint-Stock Co., or Vinamilk, the country’s fourth-biggest listed company.
“We still like the ones that are exposed to the domestic economy like consumer stocks,” he said. “We believe that even if inflation moves up, these companies would be able to pass on costs.”
Vietnam is targeting 6.5 percent economic growth next year, up from around 5.2 percent this year, the Prime Minister said this month.