Earlier this week, the last banks in the system such as Vietnam International Commercial Joint Stock Bank (VIB), Orient Commercial Joint Stock Bank (OCB), Saigon Commercial Joint Stock Bank for Industry and Trade (Saigonbank), etc. have held their annual general meetings (AGMs), closing the 2020 AGM season of banks with many plans related to capital increase and completion of listing on the stock exchanges.
Ambitious growth
At the AGM of OCB, the bank’s general director Nguyen Dinh Tung said that year 2020 is the last year to carry out the bank’s restructuring strategy in the 2016 2020 period. Therefore, the bank sets a bigger ambition for the growth of performance indicators. Accordingly, as allowed by the SBV, OCB targets a pre-tax profit of 4.4 trillion dong in 2020, up by 36 percent compared to 2019.
To achieve the above goals, OCB’s leader board has set out a plan to raise the total mobilisation from market 1 to nearly 103.3 trillion dong, total outstanding credit on market 1 (as approved by the SBV) to over 90.5 trillion dong, respectively up by 21 percent and 25 percent compared to the results in 2019.
According to OCB’s report, the bank plans to increase charter capital by an addition of 3.377 trillion dong this year. This amount will be collected from three main sources, including the distribution of dividends in 2019 in shares (nearly 2.192 trillion dong), a private placement (over 316 billion dong), and a private placement for its partner Aozora (nearly 869 billion dong). Thus, after increasing charter capital, the OCB’s charter capital will reach 11.275 trillion dong, sufficient for the bank to make investment in information technology; upgrade assets and equipment; and be ready for listing on the HCM City Stock Exchange (HoSE).
VIB has similar plan. VIB’s Chair Dang Khac Vy said that the bank ended the year 2019 with achievements of many important strategic targets. Accordingly, the bank’s pre-tax profit increased by 1.5 times compared to 2018 to over 4.080 trillion dong, total assets increased by 33 percent to over 184 trillion dong. The Return on Equity (ROE) of VIB is in the leading group of the industry, reaching 27.1%.
In 2020, despite the negative impact of Covid-19 epidemic VIB still recorded positive achievements in its activities. On that basis, VIB expects to expand credit by 24 percent to over 164.4 trillion dong and increase mobilisation by 19 percent to 166.120 trillion dong in 2020.
Particularly, by the end of December 2020, VIB plans to increase charter capital by 1.849 trillion dong via the distribution of bonus shares to existing shareholders from the Investment and Development Fund, Reserve Fund for supplementing charter capital and after-tax profit. At that time, VIB’s charter capital will reach nearly 11.1 trillion dong, the ratio of short-term fund used for medium and long-term lending will be controlled at 37%, the Capital Adequacy Ratio (CAR) under Basel II standards will be above eight percent, and the bank will be fully capable to set aside trillions of dong to boost credit, invest in liquid assets, upgrade network and list VIB shares on the stock market.
Observations in the last week of June 2020 showed that not only OCB and VIB, numerous banks which held the AGM previously such as Saigon Hanoi Commercial Joint Stock Bank (SHB), Asia Commercial Joint Stock Bank (ACB), Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) and Nam A Commercial Joint Stock Bank (NamABank) have planned to list on the HoSE by the end of 2020.
According to financial statements of these banks, their business targets are fairly favourable for the stock codes to be listed in the coming months. For example, after increasing capital by 10%, the bank’s charter capital is now more than 10.7 trillion dong. With an estimated pre-tax profit of about 1.7 trillion dong and dividend payment at eight percent in the end of the year, the bank has now approved the plan to switch from listing on the Unlisted Public Company Market (UPCoM) to the HoSE for LPB shares in order to enhance its brand image and maximise benefits for shareholders.
The situation is also quite favourable for ACB and NamABank. With an addition of nearly five trillion dong in charter capital in 2020 and expected dividend payment of about 18 percent at the end of the year, ACB’s leader said that this is the right time to transfer stocks from the Hanoi Stock Exchange (HNX) to the HoSE because the transfer will bring benefits to ACB shares because they are likely to be included in the index basket of HoSE with a significant proportion such as VN30 (about four percent), VNDiamond (10%), etc. thereby increasing the stock price in the market.
Meanwhile, at NamABank, the completion of increasing charter capital from 3.890 trillion dong to five trillion dong (expected in the third quarter of 2020) is also a strong support for the bank’s application to list on the HoSE to be approved by the Vietnam Securities Depository. With strong consensus from shareholders at the recent AGM, it is likely that all the outstanding shares of NamABank on the HoSE will be listed sooner or later in the next four to five months.
Thus, it can be said that most banks in the system have so far been prepared to boost the targets of increasing charter capital and listing. The business results announced at the recent AGMs of banks showed a fairly impressive growth of the system of commercial banks despite encountering difficulties after the outbreak of the Covid-19. This has created a big confidence in the capital market with leading forecasts of bank stocks. It is also the basis for credit institutions to complete the restructuring goal in the 2016 2020 period, especially to fully meet Basle II standards in the whole system according to the plan and direction of the SBV.
