State-owned banks rush to pay dividends in shares

After Vietcombank, two other state-owned giants, BIDV and VietinBank, are also about to issue hundreds of millions of shares to pay dividends to increase capital.

The Bank for Investment and Development of Vietnam (BIDV) has just set the dividend payment date on November 29. Accordingly, shareholders holding 100 BID shares will receive 12.69 shares, rounded down to 12 shares. After the dividend payment, BIDV's charter capital will increase from VND50,585 billion to more than VND64,190 billion.

Also in the fourth quarter of this year, the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) plans to issue shares to pay dividends at a rate of 11.7% from the remaining profit after tax and after appropriating funds in 2020. The plan to increase capital through this stock dividend was approved by the State Bank last October. It is expected that VietinBank's charter capital will increase from over VND48,000 billion to over VND53,700 billion.

Previously, another state-owned "giant", the Bank for Foreign Trade of Vietnam (Vietcombank), about three months ago, officially increased its charter capital to VND55,890 billion, after paying stock dividends at a rate of 18.1% from after-tax profits and deducting funds for 2019 and 2020.

With the remaining 100% state-owned bank, the Bank for Agriculture and Rural Development (Agribank), the National Assembly also approved in mid-year the policy of supplementing charter capital for the 2021-2030 period to a maximum of VND17,100 billion, corresponding to the remaining profit of the bank paid to the state budget in the three years 2021-2023. The plan to increase charter capital for Agribank is divided into two phases, including about VND6,750 billion added in 2023 and VND10,350 billion in 2024.

This is the second time in the past 7-8 years that the state-owned banking group has increased its charter capital. The last time this group increased its capital was in 2021, and in the remaining years, most of the dividends were paid in cash.

Unlike the private sector, increasing charter capital is beyond the autonomy of state-owned commercial banks. The rate of charter capital increase has been slower than asset growth for many years, causing the capital safety ratio of these banks to be lower than the general level and close to the minimum threshold.

According to the State Bank, increasing charter capital for state-owned banks is necessary to ensure capital safety ratio and have room for lending. In particular, Agribank is the most urgent case.

Governor Nguyen Thi Hong cited statistics at the end of 2021, Agribank's minimum capital safety ratio was only 7%, lower than other state-owned commercial banks such as Vietcombank at 9.98%, VietinBank at 8.54% and BIDV at 8.4%.

As of the end of 2022, Agribank's charter capital was VND34,446 billion, also the lowest among state-owned commercial banks and even much lower than some other private banks such as Techcombank, MB, VPBank. Therefore, it is urgent to supplement capital for Agribank, helping this 100% state-owned bank meet the minimum capital safety ratio of 8% as prescribed, towards compliance with Basel II regulations, according to the Governor.

Quynh Trang

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