Some banks were going through the process of restructuring and dealing with bad debts, so the State Bank of Vietnam (SBV) had not allowed to divide profits to shareholders.
Concentrate resources on handling bad debts
At the recent Annual general Meeting, answering the shareholders’ questions about the dividend of five percent from the remaining profit of 2019 (nearly 900 billion dong), Huynh Buu Quang, vice Chair of Maritime Commercial Joint Stock Bank (MSB), said that this was not possible when the Bank had not finished handling bad debts at Vietnam Asset Management Company (VAMC). The bad debt of MSB at VAMC was only 900 billion dong, would be settled in Q3/ 2020, and the dividend payment would be favourable.
Currently, Sai Gon Joint Stock Commercial Bank (SCB) still kept over 20 trillion dong of VAMC bonds but had made a provision of more than 40%. The reserve fund of SCB had reached over 11 trillion dong, so the Bank was still trying to deal with bad debts to reverse the provision after the restructuring process soon. Currently, the process of dealing with bad debts had a mechanism of VAMC.
Facing questions from shareholders about the dividend payment, at the general Meeting of Shareholders on May 29, Vo Tan Hoang Van, SCB’s general director, said that this was an issue that SCB Board of directors cared about and concerned. SCB’s shareholder income was 1.234 trillion dong, in which retained profit was over 700 billion dong and chartered capital supplement was 521 billion dong. If SCB paid dividends, it would be against the SBV’s regulations that banks, which were restructuring and had not yet dealt with bad debts (VAMC bonds), could not pay dividends.
At the Vietnam Export Import Commercial Joint Stock Bank (Eximbank), the number of VAMC bonds still being kept until the end of 2019 was 3.2 trillion dong. However, by the end of 2019, Eximbank made a provision of nearly 2.1 trillion dong. Therefore, it took more than 1.1 trillion dong for Eximbank to complete the plan to finalise VAMC bonds in June 2020 and then be able to calculate dividend payment.
Shareholders of Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) were upset because they had not received any dividends for many years. Duong Cong Minh, Chair of Sacombank’s Board of directors, explained, Sacombank was in the process of restructuring, so according to the regulations of SBV, dividends could not be distributed.
However, due to the need to increase capital to meet the requirements of improving financial capacity under Basel II standards, some banks had switched to high stock dividends. Specifically, this year, Orient Commercial Joint Stock Bank (OCB) had set a target of 25 percent to 27 percent of dividends. Last year, OCB also increased its capital by 1.299 trillion dong by sharing dividends with shareholders to 7.899 trillion dong.
Meanwhile, Asia Commercial Joint Stock Bank (ACB) paid a 30 percent dividend in shares, listing on Hochiminh Stock Exchange (HOSE). HCM City Development Commercial Joint Stock Bank (HDBank) planned to issue bonus shares and to pay a total dividend of 65%. Some smaller banks such as Nam A Commercial Joint Stock Bank (Nam A Bank), Vietnam Thuong Tin Commercial Joint Stock Bank (Vietbank), also planned to share dividends by shares to increase charter capital.
Saigon Hanoi Commercial Joint Stock Bank (SHB) would conduct the general Meeting of Shareholders on June 15. Although not disclosing the profit target and dividend rate in 2020, the bank’s leader revealed that SHB intended to reduce the profit target this year to 1 trillion dong. The reason was that the Bank focused on reducing interest rates for customers affected by the disease. The 2019 undivided dividends approved at 11 percent would be distributed by Q3/2020 at the latest.
Financial analysts said that some banks could still divide dividends by shares to increase charter capital but not in cash. However, in the case of banks that were in the process of restructuring, shareholders hardly expected to receive dividends because banks must focus resources to restructure and handle bad debts. At the same time, the operation of banks was delicate due to the impact of Covid-19; the profit dropped, so shareholders might not be paid high dividends next year.
