Compared with the previous years, bank shareholders no longer feel dissatisfied with dividends. However, with the promise to pay “huge” dividends for 2018, many people are sceptical.
Nevertheless, according to bank leaders, with promising business prospects, the dividend payment target set for this year is entirely achievable, even higher than expected.
*Dividend pay-out ratio will be more than 30 percent
The annual general meeting (AGM) of Vietnam Prosperity Joint Stock Commercial Bank (VPBank) agreed to make payment of 2017 dividend and bonus shares at 67 percentthe record high level of the banking sector ever since, of which, the dividend paid to shareholders is 30.22 percent.
That is not to mention, VPBank’s board of directors also promised that if the pre-tax profit in 2018 is more than 10 trillion dong, the dividend and bonus share payment to shareholders at this time next year will not be lower than 60 percent.
Meanwhile, at the annual general meeting (AGM) of Asia Joint Stock Commercial Bank (ACB) that has just taken place, Do Minh Toan, CEO of ACB said with the results achieved last year, the bank will make 2017 dividend payment at 15 percent in shares and 2018 dividend payment at 30 percent in order to offset shareholders’ disadvantages in the previous years.
This year, ACB targets at the credit growth of 15 percent following the allocation of the State Bank. The capital mobilisation from customers’ deposits and total assets also swelled 18 percent; the non-performing loan (NPL) ratio was less than two percent; the pre-tax profit of the group was about 5.699 trillion dong. However, at the end of Q1/2019, ACB’s outstanding loans reached 14.5 trillion dong, the capital mobilisation increased 15.7 trillion dong and the profit hit 1.491 trillion dong.
With the aforementioned huge expected dividend payment, ACB shareholders seem to be very glad. However, many people are still concerned whether the bank can achieve the profit target set for this year or not.
Regarding this, Toan said in 2018, ACB strives to handle bad debt to make about 500 billion dong risk provision into profits. Therefore, according to ACB leaders, the bank is likely to attain six trillion dong pre-tax profit, higher than the plan.
At Hochiminh City Development Joint Stock Commercial Bank (HDBank), with the 2017 pre-tax profit of 2.417 trillion dong, up 110.6 percent; the net Return on Equity (ROE) and Return on Assets (ROA) at 15.8 percent and 1.2 percent respectively, the bank is among Top 4 banks having the highest profitability; and HDBank’s AGM also agreed to approve 2017 dividend payment ratio at 35 percent, including 20 percent in shares and 15 percent in cash.
In fact, in Q1/2018, HDBank earned 1.045 trillion dong, tripling from the same period of 2017, of which, HDBank alone earned 851 billion dong, up 201.8 percent from the same period last year and completing 27.5 percent of 2018 plan. Therefore, Nguyen Thi Phuong Thao, vice Chair of HDBank believes that it will complete the profit target set for this year.
That is not to mention, if the merger plan of PGBank is completed soon, HDBank’s post-merger profit will be 4.7 trillion dong. Therefore, HDBank dividends in 2018 are also a bright spot for shareholders.
In fact, not only 2018 dividends are promised by banks at high level, but in this year’s AGM, banks will also submit for shareholders’ approval of “huge” dividend payment plan. At the same time, banks mainly pay dividend in shares.
Accordingly, Vietnam International Joint Stock Commercial Bank (VIB) decides to make payment of dividends and bonus shares to shareholders at 36 percent, including five percent in cash. In 2017, the bank’ shareholders also received dividend and bonus share payment at more than 44 percent.
At MB, if the dividend payment was just around 10 percent, this year, the bank decides to make dividend payment at 11 percent plus bonus shares at 14 percent, totalling 25 percent. LienVietPostBank also increases the dividend payment ratio for this year to 15 percent, instead of 10 percent last year.
According to economic experts, the fact that banks strongly make dividend payment to shareholders and issue bonus shares for this year is a channel to complete capital increase target. Banks take advantage of opportunities to both satisfy shareholders and raise chartered capital, in order to meet Basel II standards.
At the same time, the dividend payment by shares at high level will help banks retain cash to solve existing difficulties, or expand production, investment in projects that bring about long-term profit and increase competitiveness potential.
For example, at Orient Joint Stock Commercial Bank (OCB), in 2017, the chartered capital has increased by 25 percent to five trillion dong. This year, the bank plans to raise the chartered capital to 7.5 trillion dong. The capital raising method is divided into two stages.
For the first stage, OCB will raise the chartered capital from five trillion dong to 6.699 trillion dong. Specifically, the bank will issue 14.2 percent bonus shares to existing shareholders from the non-distributed accumulated profits as of December 31, 2017, with the expected total value of 695 billion dong. At the same time, the bank will additionally issue 20.5 percent stake to existing shareholders at the price equal to the par value (10,000 dong per share), with the expected total value of 1.004 trillion dong.
For the second stage, the chartered capital is raised from 6.699 trillion dong to 7.5 trillion dong by separately issuing to selected objects. In particular, objects selected outside and existing shareholders participating in separate issuances do not include shareholders holding major share proportion, board members, control board members, and CEO.
Meanwhile, Do Minh Phu, Chair of TPBank said the bank will raise the chartered capital from 5.842 trillion dong now to 8.533 trillion dong in 2018. The capital increase will be carried out via the share issuance to make dividend payment (a total of 544 billion dong, equal to 8.37 percent), and bonus share payment from the surplus of this issuance (1.314 trillion dong, equal to about 20 percent).
According to TPBank, the capital increase is aimed at ensuring CAR in line with regulations of the State Bank, while helping the bank have capital to increase business operations such as medium and long-term credit; have provisions for other business sources; invest in infrastructure and materials for development demand.
In the dividend picture with many bright colours of the banking sector last year and this year, some banks still say no to dividends. For example, despite huge pre-tax profit of more than eight trillion dong in 2017, Techcombank still makes no dividend payment. The reason that this bank’s management board gives is to increase the attractiveness to shares that are about to list on Hochiminh city Stock Exchange (STC).
Sacombank (coded SCB) is in the restructuring process, so they still say no to dividends though their shareholders continue to question and complain. The reason is the bank needs to retain surplus capital to supplement the equity, and increase chartered capital.
Chair of Sacombank Duong Cong Minh said like other shareholders, he also joins Sacombank with the purpose of getting dividends, not share business. Therefore, if Sacombank shareholders are not patient after the restructuring process to enjoy dividends, there is no way. However, with shareholders’ pressing about no dividend payment for many years, Minh said in 2018 or 2019, Sacombank will ask for approval from the State Bank to make partial dividend payment from the profit of previous years.
