HÀ NỘI — Many banks have announced their dividend payout plan in shares to raise capital and improve competitiveness amid the prolonged COVID-19 pandemic.
The shareholders of Vietnam International Bank (VIB) have approved the proposal to issue 40 bonus shares at the rate of 40 per cent at its 2021 Annual General Meeting late last month.
According to VIB, by the end of 2020, the bank had more than VNĐ4.8 trillion (US$207.8 million) of remaining profit after the provision for funds. It plans to distribute bonus shares to increase capital from VNĐ11.09 trillion currently to over VNĐ15.53 trillion.
The distribution is expected to be completed before September 30 this year.
"The bank is in a good growth period so it needs capital to invest in technology, networks, credit extension, meeting capital adequacy ratios as prescribed," said a representative of VIB.
Việt Nam Maritime Commercial Joint Stock Bank (MSB) recently approved a plan to pay dividend in shares at a rate of 30 per cent. It is expected that after completing the plan, MSB's chartered capital will reach VNĐ15.2 trillion.
A representative of the bank said: “In addition to supplementing the bank's medium and long-term capital, paying in shares can ensure financial safety ratios following international standards such as Basel II.”
Asia Commercial Bank (ACB) plans to issue more than 540 million shares to pay 2020 dividends at the rate of 25 per cent. Accordingly, the bank's charter capital is expected to increase by more than VNĐ5.4 trillion.
Sài Gòn-Hà Nội Bank (SHB) will pay dividends at the rate of 20.5 per cent by shares, of which 10 per cent for 2019 and 10.5 per cent for 2020.
Orient Commercial Bank (OCB) plans to pay dividend at a rate of 25 per cent.
Nam Á Bank plans to increase its charter capital to VNĐ7 trillion. This includes a plan to issue 57 million shares to pay dividends at a rate of 12.5 per cent and offer 143 million shares in private placement.
Bank for Investment and Development of Việt Nam (BIDV)’s shareholders have approved a plan to increase its charter capital by VNĐ8.3 trillion to VNĐ48.52 trillion, up 20.6 per cent, in the form of dividend payment in shares and additional issuance.
Under the plan, BIDV plans to issue 207.3 million shares to pay dividends for 2019 at the rate of 5.2 per cent, issuing 281.5 million shares to pay dividends for 2020 at a ratio of 7 per cent.
Some financial and banking experts said banks' plans to increase capital in 2021 was necessary to ensure credit supply. Currently, the income of many banks still came from credit. At 12-13 per cent, the equity of banks will increase at least by 7-8 per cent.
According to the policy of the State Bank of Vietnam (SBV), this year, banks will only be allowed to pay dividends in shares, instead of cash as before.
Banking is a conditional business sector so credit institutions must comply with the regulations of the State Bank, including the policy of dividend payout.
Along with other cost reduction solutions, the non-cash dividend payment will help credit institutions have more resources to reduce lending rates, supporting millions of customers affected by the COVID-19 pandemic.
However, in order to have a source of money set aside for bad debt handling, restructuring and especially to support businesses affected by the pandemic, some banks decided not to pay dividends in 2020 such as VPBank, Techcombank, Sacombank, Eximbank, SCB and ABBank. VNS
