Pressure or motivation from increasing charter capital?

The State Bank of Vietnam (SBV) has approved the Electricity Finance Joint Stock Company (EVNFinance - MCK: EVF) to increase its charter capital by more than VND638.3 billion by issuing shares to pay dividends and issuing shares to employees.

Accordingly, EVNFinance was approved by the State Bank to increase its charter capital by a maximum of VND 563.3 billion by issuing shares to pay dividends, and to increase its charter capital by a maximum of VND 75 billion by issuing shares to employees under the ESOP program, with a total additional charter capital of VND 638.3 billion. This charter capital increase plan was approved by EVNFinance's General Meeting of Shareholders at the annual general meeting on March 15, 2024.

Currently, EVNFinance is in the process of completing procedures with the State Securities Commission to implement this capital increase issuance. It is expected that by the end of 2024, EVNFinance's charter capital will increase from VND 7,042.4 billion to more than VND 7,680 billion, equivalent to the capital scale of some commercial banks.

Thus, with the continued increase in charter capital of EVNFinance, shareholders will put great pressure on the Board of Directors and Executive Board of EVNFinance to use capital effectively to increase EPS and increase ROE for shareholders. However, this is also the motivation for the Board of Directors and Executive Board of EVNFinance to filter business opportunities and select suitable customers to ensure both stable and sustainable development and safe, effective and legally compliant operations.

According to Directive No. 01/CT-NHNN of the State Bank dated January 15, 2024, credit institutions are encouraged to pay dividends to shareholders in shares to improve financial capacity and credit provision for the economy, stabilizing market interest rates. The source of capital used to pay dividends in shares of EVNFinance is from undistributed after-tax profits in 2023 after setting aside funds and profits retained from previous years, the total amount used to pay dividends is VND 570.8 billion, equivalent to a dividend payment rate in shares of 8%.

Regarding the issuance of shares to employees under the ESOP program, in 2023, EVNFinance carried out an issuance. These ESOP shares are restricted from trading according to the law within 1 year from the date of issuance.

Source: https://baodautu.vn/evnfinance-ap-luc-hay-dong-luc-tu-viec-tang-von-dieu-le-d226079.html