In the first month of 2024, many banks have announced plans to pay dividends to shareholders. In particular, paying dividends in cash has attracted the attention of investors because they will receive "cold cash".
Bank health is solid
Vietnam International Commercial Joint Stock Bank (VIB) is the first bank to announce a cash dividend this year. VIB has decided to spend more than VND1,500 billion to pay an interim cash dividend in 2023 to existing shareholders at a rate of 6%. Accordingly, shareholders owning 1 share will receive VND600. The expected dividend payment date is February 21, 2024.
VIB leaders at the 2023 Annual General Meeting of Shareholders shared that if there were no restrictions from competent authorities, VIB expected to be able to pay dividends of over 30% of after-tax profit achieved in 2023.
In 2023, VIB paid dividends twice in March and May at the rates of 10% and 5%, respectively. In addition, VIB also paid dividends in shares to increase its charter capital at a rate of 20%. The bank also issued an additional 7.6 million shares to ESOP employees in June 2023. VIB's charter capital accordingly increased to VND25,368 billion.
In addition to maintaining stable growth in business results, in order to improve asset quality as well as create a solid reserve buffer, the bank also proactively set aside provisions of up to more than VND 4,800 billion, 3.8 times higher than in 2022. By the end of 2023, VIB recorded pre-tax profit of more than VND 10,700 billion.
At the end of 2023, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) achieved pre-tax profit of VND22,900 billion. Therefore, at the recent meeting with investors and analysts, the bank revealed that it will submit to the 2024 shareholders' meeting a cash dividend payment of at least 20% of the total annual after-tax profit or 4%-5% of the bank's equity at the beginning of the year.
If the plan is approved, Techcombank shareholders will receive cash dividends for the first time in 10 years.
Mr. Jens Lottner - General Director of Techcombank said: "Over the past 10 years, we have been consistent with the policy of retaining all profits for reinvestment and business expansion. But now we are reconsidering."
Explaining the change in dividend payment policy, Mr. Jens Lottner said that based on the assessment of profit potential, capital situation and forecasts of policy changes, the board of directors believes that the bank can pay cash dividends while still maintaining the growth rate of revenue and profit of 20%/year as well as safety ratios as set out in the strategy.
Mr. Jens Lottner also affirmed that Techcombank's board of directors is developing a policy to distribute cash dividends in a sustainable and long-term manner, not just for a few years. However, he also noted that the final decision will belong to the Board of Directors and the General Meeting of Shareholders.
After many years of focusing resources on strengthening financial health and supporting customers under the direction of the State Bank, from 2023, a number of banks have re-implemented cash dividend payments.
For shareholders, cash dividends reflect the "health" of the bank with a solid capital foundation, meaning that their long-standing investment has been recouped.
In 2023, there will be 6 banks that will pay a part of their dividends in cash, namely VPBank, HDBank, VIB, TPBank, ACB and MB. It is estimated that the total amount that these banks will spend to pay dividends to shareholders is more than 23,000 billion VND.
Still need to reinforce the buffer
Besides, many banks still encourage dividend payment in shares to increase capital, helping to thicken the bank's capital buffer, increase lending capacity, and improve financial capacity against future risks.
Over the past year, more than 20 commercial banks have been approved by the State Bank to increase their charter capital. It is expected that at the 2024 general meeting of shareholders, many banks will announce plans to pay dividends in shares to increase capital.
Mr. Tran Minh Binh, Chairman of the Board of Directors of VietinBank, said that the bank has received opinions from the State Bank and the Ministry of Finance allowing it to retain all 2022 profits to increase capital through stock dividends.
“VietinBank proposes that competent authorities allow it to retain all 2023 profits to increase capital and approve the policy allowing VietinBank to retain all annual profits for the 2024-2028 period to increase capital, improve financial capacity, and expand credit growth space,” Mr. Tran Minh Binh proposed.
In the context of rising bad debt and great pressure on capital supply for the economy, strengthening the capital foundation of the banking system is especially important. This is also the policy of the State Bank.
BacABank has announced a resolution on the last registration date to pay dividends in shares. Accordingly, the bank plans to issue more than 62.5 million shares to pay dividends, equivalent to a rate of 7.5%. The total issuance value at par value is more than VND 625 billion. The source of implementation is taken from the accumulated undistributed profits in 2023, after setting aside funds. It is expected that after the issuance, BacABank's charter capital will increase from nearly VND 8,334 billion to more than VND 8,959 billion.
Dr. Can Van Luc and a group of experts from BIDV Training and Research Institute stated that the capital adequacy ratio (CAR) of banks is currently improving slowly and at a low level compared to the region, which is one of the challenges in the coming years. While countries in the region have implemented Basel III or part of Basel III, Vietnamese commercial banks are only in the process of implementing Basel II.
Therefore, according to Mr. Luc, charter capital is a key component in calculating the CAR ratio and ranking banks. Increasing the charter capital of banks in the coming time is extremely necessary, helping banks develop healthily, expand business operations, and increase resilience in a volatile economy.
HA (according to Vietnam+)Source
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