Major bank BIDV attracts investors for 9% stake via private placements

Leading Vietnamese bank BIDV is selecting the best investors for its plans to increase charter capital this year to serve its growth purposes, BIDV chairman Phan Duc Tu said Friday.

The major state-run lender plans to issue about one billion shares this year to increase charter capital to VND61.56 billion ($2.62 billion) in two ways - 642 million shares to pay dividends for 2021 and 455.2 million new shares through public offerings or private placements, as approved by the bank’s 2022 annual general meeting (AGM).

Speaking at its 2023 AGM on Friday, Tu said his bank has already met with 38 investors interested in the planned private placements, equal to a total 9% stake, but they have not made an investment decision due to prolonged global economic headwinds.

However, BIDV has already found some other potential investors as alternatives. Tu said BIDV will work with the State Bank of Vietnam (SBV) in selecting the most appropriate among them for the private placements.

He told the meeting that banks today have to assure risk control while scaling up their charter capital if they want to pursue stable and sustainable growth.

BIDV is working on its restructuring plan until 2025, with a vision to 2030, for SBV approval. Under the plan, it is positioned as a state-run commercial bank with state capital not lower than 65%, while green credit will be a top priority.

Assessing bad debt risks in the coming time, Tu said the global banking sector was hit by the U.S. and European banking crisis [happening in March]; meanwhile, Vietnam's macroeconomic situation is stable but the economy has been facing unfavorable conditions worldwide. For BIDV, it expects its non-performing loan ratio this year to be lower than 1.4%.

In real estate, Tu said BIDV has met with 15 leading Vietnamese real estate developers, and all mentioned legal problems as the biggest obstacles in the ailing market.

“BIDV's view is we keep a normal relationship with this field but we have appropriate control measures for each segment in the market based on liquidity and demand.

We do not say no to real estate. Currently, our real estate loans account for about 2-3% of our total outstanding loans,” said the BDIV chairman.

Le Ngoc Lam, CEO of the bank, said its profit before tax in the first quarter of 2023 reached VND6.6 trillion ($281.3 million), up 58% over the same period last year. By the end of the quarter, its total assets were VND2,060 trillion ($87.8 billion).