Banks neglect paying dividends, investors cry foul

To date, most banks have successfully hosted general shareholder meetings. One of the most fiercely debated topics is dividends. While some banks have plans to pay cash dividends, the argument on dividends at the majority of banks has not ended.

Waiting for dividends in hopeless

Shareholders of VPBank expressed their excitement when they heard that they were about to receive dividends in cash. The lender plans to spend a total of VND7,933 billion to pay dividends at a rate of 10%. The payment time is estimated for the second or third quarter of this year.

"I don't remember the previous time I received dividends, but I hope that from now on, every year we will seek shareholders' approval to pay cash dividends," said Mr. Bui Hai Quan, Deputy Director and Chairman of VPBank.

In fact, except for the number of preferred shares in which VPBank paid cash dividends in 2018, over the past 10 years, the bank's shareholders have not received dividends. Many other banks have been in the same situation. PGBank has entered its 10th year of not paying dividends. Techcombank shareholders also have to wait for a decade; SaigonBank is the 6th year in a row; ACB is the 7th year; Sacombank is the 8th year...

Bank shareholders fought hard for their rights at this year's shareholder meeting. However, unlike VPBank, TPBank, VIB, HDBank, and ACB, which have plans to pay cash dividends, the rest of the banks pay dividends in shares, such as Vietcombank, VietinBank, BIDV, OCB, Eximbank, LienVietPostBank. Several banks have not paid dividends (Sacombank, Techcombank).

Preliminary figures show that Vietcombank, VietinBank, BIDV, Agribank, Techcombank, VPBank, and MB had pre-tax profits of over VND 20,000 billion. And profit of 22 banks, including LienVietPostBank, SeABank, SHB, and Viet Capital Bank, rose by double digits. Eximbank has also seen a three-digit profit increase. In 2022, no banks reported losses.

Mr. Ho Hung Anh, Chairman of the Board of Directors of Techcombank, responded to shareholder queries at the general meeting of shareholders, saying, "I remember in 2013, also at the general meeting of shareholders, I told the bank for ten years. This year marks the tenth year without a cash dividend. I believe it will be the last year without dividends."

"Retaining profits means investing in the system, investing in people, and investing in technology for the long run so that we can have a profit breakthrough," explained Dao Manh Khang, Chairman of ABBank's Board of Directors. In the next 3-5 years, ABBank does not intend to issue cash dividends.

"The bank is in the restructuring phase. It is necessary to focus all resources on dealing with bad debts and setting up provisions," revealed Sacombank's CEO Nguyen Duc Thach Diem. 

Where is the source?

Of course, shareholders are not happy to hear these comments. Previously, in 2020-2022, when the economy was affected by the COVID-19 pandemic, shareholders were reluctant to "withhold" dividends. During that period, although the banks operated well, the State Bank of Vietnam ordered banks not to pay dividends in cash, reserving resources on dealing with bad debts, VAMC bonds, and further lowering interest rates. borrowed, so the shareholders had to accept.

This year, with brighter business results and tightening policy from the SBV, shareholders are optimistic about the cash that will be generated in the context of challenging investments. However, the number of banks that claim to pay cash dividends may be counted on one hand. According to a Vietcombank spokesman, the payout must be approved by the relevant body because the state has a majority stake.

Economic expert Huynh The Du commented, "It is difficult to find solutions to force businesses to pay dividends in cash, especially in developing markets. If you use money to pay dividends, when you need money to invest, you have to spend money on mobilizing." He added that in the world, only about 33% of businesses pay dividends in cash, down sharply from 95% four decades ago.

From an investor's perspective, financial expert Lam Minh Chanh said that the problem is not paying dividends or not paying dividends. In the world, many businesses such as Meta (Facebook), Amazon, Tesla, etc. do not pay dividends, but shareholders do not react because the share price increases. In Vietnam, the average rate of return when investing in Sacombank's STB shares since 2015 is only about 6.5% per year, lower than the bank's interest rate. This is the main cause of shareholder frustration.

Last year, not only STB but also banking stocks fell from 10–60%; only 2 stocks increased slightly: Vietcombank's VCB and BIDV's BID. This year, whether bank stocks can achieve high profitability or not amid the still sluggish Vietnam stock market is a challenging question.

Regarding dividends, VIB leaders said that the bank will regularly refer to the dividend payment regime of foreign banks, especially strategic shareholders. Next year, if there is no limit on the State Bank, it is possible to pay a dividend of more than 30%.

VPBank also stated: "VPBank has set a goal of paying cash dividends for five consecutive years (2022–2026) and will spend 30% of its annual profit after tax to pay cash dividends to shareholders." Mr. Do Minh Phu, Chairman of TPBank's Board of Directors, announced: "From 2023 to the following years if the bank still has impressive business results, we will maintain the dividend in two parts. dividends in cash and in shares.