Many banks secured approval from the State Bank of Vietnam (SBV) to increase their charter capital this year, and analysts recognize this as an opportunity for bank stocks to react positively and for the banking industry to further expand.

The race to add to charter capital has been taking place in the banking industry for many years, and especially after the “Restructuring the system of credit institutions associated with bad debt settlement for the 2021-2025 period” scheme was announced.

Under this scheme, to 2025, banks with financial potential, competitiveness, and large scale must have a minimum charter capital of VND15 trillion ($640 million). Those with financial potential, competitiveness, and small to medium scale, and those with foreign capital, must have VND5 trillion ($213 million).

Plans to increase charter capital are necessary for banks to further develop their financial potential, expand their business scale, and have suitable Capital Adequacy Ratios (CAR) under regulations from authorities and to meet annual growth plans.

According to SSI Securities, if the capital increase plans of some banks are successful, this will support their stock price. Bank stocks have reacted quite positively since the beginning of August, when increases to charter capital were approved and announced.

In the short term, in addition to support from increased charter capital, the Viet Dragon Securities Company (VDSC) believes that prospects for higher profit growth in the second half of 2022 will also support valuations and share prices in the banking and aviation industries.

It therefore forecasts that the uptrend in the banking group of stocks can be maintained in the short term and the banking industry will lead a market rally due to prices remaining at a good discount and business results being positive.