Banks increase capital through paying dividends in shares

It is estimated that more than four billion bank shares are issued this year to pay dividends to investors.

Many large banks are implementing plans to issue shares to pay dividends in the last months of this year.

The move is aimed to increase charter capital, improve financial strength, meet the State Bank of Vietnam (SBV)’s capital safety regulations and expand operating scale.

Accordingly, BIDV plans to issue more than 642 million shares to pay dividends, which will increase the bank’s charter capital from nearly VND50.59 trillion to more than VND57 trillion.

BIDV has recently finalised the dividend entitlement date on November 29 this year, at a rate of 12.69 per cent. Thus, the bank’s shareholders, who hold each 100 BIDV shares, will receive 12.69 new shares.

Besides BIDV, VietinBank plans to issue more than 564 million shares to pay dividends to increase its charter capital from nearly VND48.056 trillion to VND53.7 trillion.

VietinBank has also closed the ex-rights trading date on November 30 this year. The dividend ratio is 11.7415 per cent, meaning shareholders owning 1,000 shares at the closing date will receive 117 new shares.

Earlier, Vietcombank also officially increased its charter capital to VND55.89 trillion, after paying stock dividends at the rate of 18.1 per cent.

Agribank in the middle of this year was also approved by the National Assembly to supplement charter capital for the 2021-30 period with a maximum of VND17.1 trillion, of which VND6.75 trillion will be added in 2023 and a maximum of nearly VND10.35 trillion will be in 2024 from the State budget.

Not only large State-owned banks, many other private banks have also locked in the right to receive dividends and bonus shares, such as OCB with a dividend ratio of 50 per cent in shares; HDBank with a rate of 15 per cent in shares; and SHB with a ratio of 18 per cent in shares.

Notably, in this November, VPBank for the first time in the past decade finalised the list of shareholders to pay cash dividends at a rate of 10 per cent. With more than 7.9 billion shares in circulation, VPBank spent more than VND7.9 trillion to pay dividends. VPBank was one of the few banks that distributed a portion of dividends in cash this year.

SBV’s statistics showed 28 banks have expected to increase their charter capital by more than VND163 trillion in 2023, higher than last year’s number of VND154 trillion. It is estimated that more than four billion bank shares are issued this year to pay dividends to investors.

According to international credit rating organisation Fitch Ratings, Vietnam's rapid credit growth in recent years has posed a big challenge for banks in ensuring capital safety. Fitch Ratings believes that the Vietnamese banking system needs additional capital of up to US$10.7 billion, equal to 2.9 per cent of GDP, to ensure risk provisions and maintain the capital adequacy ratio (CAR) at 10 per cent.

Source: VNS