Transactions at SHB. The increase in chartered capital will improve the bank’s financial capacity. — Photo courtesy of the bank
The State Bank of Viet Nam (SBV) has given approval to SHB to increase its charter capital from the current VND36.6 trillion (US$1.55 billion) to VND39.6 trillion ($1.68 billion).
The capital increase would be implemented by issuing shares to pay last year's dividends to existing shareholders at the rate of 18 per cent and to issue shares under the employee stock ownership plan (ESOP).
With the capital increase, SHB will be in the Top 5 private commercial banks with largest chartered capital.
SHB has achieved sustainable growth in profits, increasing its chartered capital steadily over the years. Its liquidity and risk management indicators are all better than the SBV’s regulations.
SHB is also one of the banks that ensures the interests of shareholders through regular dividend payments from 7 to 15 per cent a year, and notably 18 per cent in 2022.
SHB’s representative said that the increase in chartered capital is important to improving the bank’s financial capacity, increasing its competitiveness in the process of international economic integration, and meeting its shareholders’ interests.
Shares issue under the ESOP are one of the policies to connect the bank with its employees. This activity also contributes to encouraging and attracting top talent and improving work efficiency. It's the driving force for SHB to complete its goals and development strategy in the future.
In 2023, SHB targets pre-tax profit of more than VND10.6 trillion, up 9.67 per cent over last year. Total assets are expected to grow by 10.09 per cent and the capital mobilisation market increased by 14.78 per cent. The dividend rate is expected to be 15 per cent.
By the end of the first quarter of 2023, the bank's total assets reached VND570.1 trillion. Total operating income (TOI) reached VND6.2 trillion, posting a 32.2 per cent year-on-year increase. Net profit reached VND4.9 trillion, up 35 per cent over the same period last year. This result helped SHB to enter the group of banks with the highest net profit growth in the first quarter of 2023. Despite actively making provisions for risk mitigation (nearly 3 times higher than in the same period last year), the bank still achieved a pre-tax profit of VND3.6 trillion.
International credit rating agency Moody's gave SHB a B1 credit rating. SHB's B1 and B2 BCA ratings reflect its expectation that SHB's credit index will remain stable over the next 12 to 18 months. B2 BCA also considers the bank's capital and liquidity.
SHB also completed the transfer of half of SHB Finance's charter capital to its Krungsri (Thailand) partner in the process of divesting 100 per cent of its capital according to the previously signed deal.
In the next three years, the bank will transfer all the remaining 50 per cent shares to Krungsri according to the agreement. The transaction will bring a significant surplus for SHB shareholders, freeing up more resources for the bank to continue to strengthen its financial capacity and fundamental factors, thereby promoting business activities in key segments, especially boosting investment in digital transformation.
The surplus from the deal also helps SHB to strengthen its capital buffer, one of the bases to accelerate the application of the Basel III roadmap to comply with international financial reporting standards (IFRS) in 2023.
Many large financial institutions such as WB, ADB, IFC, and KFW have co-operated with SHB through grants and investments worth hundreds of millions of US dollars. Recently, SHB and IFC signed a high-end loan co-operation agreement, in which, the first loan in a total loan package of $120 million from IFC's direct capital has a term of three years. The loan is intended to assist SHB in developing its small and medium-sized enterprise (SME) loan portfolio, which includes women-owned businesses and those involved in the supply chain.
"The IFC and many international financial institutions have accompanied SHB in recent years continue to affirm the bank's prestige and capacity in the international financial market.
"It affirms the right strategy in developing the banking industry, building a solid foundation, helping sustainable growth, and meeting safety standards while complying with international standards as well," the bank's representative added.
The bank is promoting investment in IT as well as improving governance and management capacity, constantly expanding its network and scale, and aiming to become the most modern and popular retail bank in Viet Nam. — VNS