On June 13, HCM City Development Joint Stock Commercial Bank (HDBank) will conduct the annual shareholder meeting to approve the operation strategies of 2020, including plans to increase more than 6.278 trillion dong of charter capital from the stock dividend payment at the rate of 50 percent and issue bonus shares at the rate of 15%. The charter capital of HDBank after completing the increase will reach over 16.088 trillion dong.
On June 16, Asia Commercial Joint Stock Bank (ACB) will hold the 2020 annual shareholder meeting. Accordingly, ACB expects to raise chartered capital this year from 16.627 trillion dong to 21.615 trillion dong via issuing shares to pay dividends with rate of 30%. The estimated time for completing the capital increase is in the fourth quarter of 2020. In addition, ACB will submit to shareholders for approval to transfer the listing registration of ACB shares from Hanoi Stock Exchange (HNX) to Hochiminh Stock Exchange (HOSE).
At the shareholders’ meeting scheduled to take place on June 30, Orient Commercial Joint Stock Bank (OCB) also sets a target of stock dividend, ratio of 25-27%. OCB was approved by the State Bank of Vietnam (SBV) to increase its chartered capital from 7.899 trillion dong to over 8.767 trillion dong in mid-March 2020, after the bank’s shareholders approved a private placement plan of nearly 86.9 million shares, equivalent to 11 percent of capital, to Aozora Bank of Japan.
This year, OCB aims to complete the increase in charter capital through a private placement to this partner. According to the latest announcement of OCB, the ownership ratio of foreign investors in OCB is currently 4.98%, belonging to a fund of Vina Capital.
At Sai Gon Joint Stock Commercial Bank (SCB), the 2020 annual shareholder meeting on May 29 approved the work plans for this year.
In the plan to accelerate restructuring in phase 2, SCB will raise the chartered capital by five trillion dong by issuing additional shares to domestic and foreign shareholders to increase the total charter capital to 20.231 trillion dong.
Due to the impact of the Covid-19 pandemic and following the Directive No. 02/ CT-NHNN of SBV in “timely adjusting business plans, financial plans in accordance with the actual situation before the annual general shareholder meeting “, in 2020, Vietnam Export Import Commercial Joint Stock Bank (Eximbank) targets the operating costs of 326 billion dong (down 11 percent compared to the original plan in 2020), mobilised capital of 147.8 trillion dong (down 8%) and outstanding debts of 122.275 trillion dong (down 4%).
According to the adjusted plan, the provision expense proactively increases by 414 billion dong compared to the 2020 plan.
With the above adjustments, the profit from core business plan decreases by 10.3%, the plan to handle collaterals of customers with bad debts, VAMC bonds as estimated at the beginning of the year is forced to delay the progress to the next year, causing the total profit before tax plan of Eximbank to be 1.318 trillion dong, down 40 percent compared to the initial plan.
By the end of the first quarter of 2020, the increase of debt group 3, 4 and 5 has happened in many banks, pushing the ratio of bad debts higher than the beginning of the year.
For example, at n Phong Commercial Joint Stock Bank (TPBank), bad debt as of March-end was 1.884 trillion dong, up 53 percent compared to the beginning of the year. Meanwhile, outstanding loans increased by five percent to 100.509 trillion dong. Accordingly, the ratio of bad debts to total outstanding loans increased from 1.29 percent to 1.87%.
At Saigon Bank for Industry and Trade (Saigonbank), bad debts grew by 95 percent in the first three months to 377 billion dong, mainly due to the sharp increase in substandard debts. Accordingly, the ratio of bad debts to outstanding loans soared from 1.96 percent to 2.65%. For Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank), internal bad debts as of March-end stood at 6.046 trillion dong, up by over 300 billion dong from the beginning of the year. The ratio of bad debts in the balance sheet to the total outstanding loans increased from 1.94 percent to 1.97%.
In fact, Sacombank’s bad debt handling activities showed signs of slowing down in the first months of this year compared to the same period last year, when profit from other activities decreased to 76.6%, reaching only 71 billion dong, and bad debts at VAMC have not had any significant change.
Banks are concerned that bad debts will increase sharply in the last two quarters due to the lag of Covid-19 pandemic affecting the operation of the industry. The impact of the disease also made it difficult for customers to pay bank debts on time, the expected loan balance was about two quadrillion dong, accounting for about 23 percent of the system’s total loan balance.
According to SBV’s calculation, if the pandemic is controlled in the first quarter, the ratio of bad debts in the balance sheet, debts sold to VAMC and classified debts will be at 2.9-3.2 percent at the end of the second quarter and 2.6-3 percent at the end of the year.
If the pandemic is controlled in the second quarter, this rate will increase to 4 percent and 3.7%, respectively at the end of the second quarter and the end of the year. SBV even said that bad debts could be higher, affecting the progress of restructuring and handling bad debts of banks, as well as the recovery ability of weak banks.
