More bank shares to hit stock market on bonuses, public issues

Monday, Jul 26, 2021 08:02

In June the central bank allowed VietinBank to increase its charter capital from VND37.2 trillion (US$1.6 billion) to over VND48 trillion ($2.1 billion) by paying dividends in shares for 2020. — Photo

At least around seven billion shares issued as dividends, under employee stock ownership plans and public issuances by banks are expected to enter the stock market in the two remaining quarters of the year.

They include MB and Vietinbank with nearly two billion shares.

In June MB shareholders approved the 2020 dividend payout of 35 per cent in shares.

Also in June the central bank allowed VietinBank to increase its charter capital from VND37.2 trillion (US$1.6 billion) to over VND48 trillion ($2.1 billion) by paying dividends in shares for 2020.

SHB offered 175 million shares for sales to the public at the same time.

Besides, more than 540 million shares were issued as dividends at the rate of 25 per cent by ACB, 443 million bonus shares at the rate of 40 per cent by VIB and 58.6 million shares at the rate of 14 per cent by VietBank.

The list goes on.

Another State-owned bank, BIDV, is awaiting approval from the central bank to issue nearly 500 million shares as dividends for 2020 and 2021 and 341.5 million shares to the public this year.

Analysts said banks have excellent growth prospects this year but their share prices could decline due to the sharp rises in the first half of the year.

Besides, investments are expected to flow into other asset classes, they said.

Le Quang Minh, head of research at Mirae Asset Securities Vietnam, said a correction in the prices of bank stocks “is easy to understand” since they have run up so much.

But banking would remain the favourite sector since its performance would remain much better than other sectors, which have been hit hard by the COVID-19 pandemic, he said.

Other analysts said banks that get approval from the central bank to increase their credit growth limit, produce good results and have a low bad debt ratio would be the top picks.

Personal income tax makes significant contribution to Gov't revenues

While the Government has lost billions of dong in tax revenues from several sectors and industries due to the impact of the COVID-19 pandemic, the tremendous growth in the stock and property markets has helped compensate this to a large extent.

According to the General Department of Taxation, tax revenues in the first five months of this year were around VND575.6 trillion, equivalent to 52 per cent of the full-year target and 15 per cent up year-on-year.

Personal income tax revenues during the period increased by 12.7 per cent and accounted for 60.2 per cent of the year’s target. The biggest contributions came from taxes on stocks, personal investments and real estate, which were up 320 per cent, 169 per cent and 193 per cent.

Analysts said the increasing number of new investors and soaring liquidity in the stock market meant their contribution to personal income tax grew by 320 per cent in the first five months.

The State Securities Commission said from January to May this year the average daily trading was VND21.21 trillion, an 185.9 per cent rise from last year.

Market capitalisation was worth VND6.44 quadrillion as of late May, 21.7 per cent up for the year, and equivalent to 102.3 per cent of the nation’s gross domestic product (GDP).

The number of new stock trading accounts this year is 480,490, or 20 per cent more than the new accounts were opened in the whole of 2020.

Yuanta Securities Viet Nam said tax revenues from trading bonus and dividend shares accounted for 10 per cent.

According to Decree 126 that took effect last December, investors have to pay a 5 per cent income tax if they want to sell them against a normal rate of 0.1 per cent of trading value. The decree also stipulates a 5 per cent tax on cash dividends.

Tax revenues from the sale of bonus and dividend shares doubled this year, Yuanta said.

Analysts said around 7.5 billion bonus and dividend shares are planned to be issued by companies in the remaining months of the year.

Besides personal income tax, corporate tax collections from the stock market are also expected to surge this year with many securities companies having big growth targets and expecting to earn profits running into the trillions.

Shareholders of Viet Capital Securities have approved a pre-tax profit target of VND1.25 trillion, a 31.4 per cent increase from last year.

Ho Chi Minh City Securities Corporation targets profits of VND1.2 trillion, an 82 per cent increase.

VNDirect Securities Corporation targets a 29 per cent rise in profits to VND1.1 trillion, the first time ever it expects them to top the trillion-dong mark.

Techcom Securities JSC and SSI Securities Corporation are some others with VND1 trillion profit expectations.

Securities companies’ambitious growth scenarios are based on expectations that the VN-Index will hover around the 1,250-point level this year and a number of other positive factors.

How about the real estate market’s contribution to tax revenues?

Corporate taxes collected from sales of properties increased 61.7 per cent year on year or around VND8.6 trillion in the first six months of the year as the property market remained vibrant in many parts of the country.

Meanwhile, personal income tax on real estate deals increased by 68.8 per cent. — VNS

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