Banks pay dividends in shares to increase capital in 2024
According to experts, banks should continue to plan to pay dividends in shares to increase the ability to meet capital as well as financial capacity. The dividend method is considered appropriate in the context that many banks are still having to increase their capital buffers to meet Basel II international banking standards and higher standards.
Many banks have announced plans to pay dividends in shares right at the beginning of this year, aiming to increase charter capital, improve financial strength, meet capital safety regulations and expand operational scale.
The board of directors of VietinBank (stock code CTG) recently announced the remaining profit distribution plan of 2022, estimated at nearly VNĐ11.69 trillion. Accordingly, the bank will pay dividends in shares based on the approval of the competent authority. In 2023, VietinBank also increased its charter capital to VNĐ53.7 trillion from the remaining profit of 2020.
At a conference earlier this year, VietinBank's leaders proposed to retain profits in 2023 and annual profits in the 2024-28 period to increase capital, improve financial capacity and expand credit growth.
Prosperity and Development Commercial Joint Stock Bank (stock code PGB) has recently finalised the list of shareholders to reward 120 million shares, equal to a total par value of VNĐ1.2 trillion. Capital for the share issuance is taken from the bank’s accumulated profits and reserve fund to supplement charter capital according to the bank's 2022 financial report.
Bac A Bank (stock code BAB) at the end of January completed the 2022 dividend payment in shares at a rate of 7.5 per cent. According to the plan, Bac A Bank issued more than 62.5 million shares with a total par value of more than VNĐ625 billion. Capital source for the issuance was from Bac A Bank's accumulated undistributed profits in 2022. The move helped increase the bank's charter capital from VNĐ8.33 trillion to more than VNĐ8.95 trillion.
Saigonbank (stock code SGB) has recently also been approved by the State Bank of Vietnam to increase its charter capital by a maximum of VNĐ308 billion in the form of issuing shares to pay dividends.
Saigonbank's 2023 annual general meeting of shareholders approved the payment of dividends in shares to existing shareholders at a rate of 10 per cent. Specifically, SaigonBank plans to issue 30.8 million shares to pay dividends.
The central bank has so far encouraged commercial banks to pay dividends in shares to increase capital, aiming to thicken banks' capital buffers and improve financial strength against future risks.
In the context of high bad debts and great pressure on capital supply for the economy, strengthening the capital base of the banking system is especially important.
Deputy Governor of the State Bank of Việt Nam Đào Minh Tú encouraged banks to pay dividends in shares to focus financial resources on handling bad debts in 2024.
According to experts, banks should continue to plan to pay dividends in shares to increase the ability to meet capital as well as financial capacity. The dividend method is considered appropriate in the context that many banks are still having to increase their capital buffers to meet Basel II international banking standards and higher standards. — VNS
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