Vietnam banks plan to float billions of shares

An estimated 12.4 billion banking stocks are poised to flood Vietnam’s market as local lenders plan dividend payouts or share issuances to raise their charter capital this year.

State-controlled Vietcombank, the largest Vietnamese lender by market capitalization, plans to spend VND24.98 trillion ($982.48 million) of its 2023 profit on share dividend payouts. Its plan is awaiting approval from the State Bank of Vietnam, the country's central bank.

According to its Q1 consolidated financial statements, the bank, listed on the Ho Chi Minh Stock Exchange as VCB, had over VND85.33 trillion ($3.36 billion) in retained earnings as of end-March, much higher than its current charter capital of VND55.89 trillion ($2.2 billion). It has made dividend payouts for years.

Similarly, with VND13.93 trillion ($547.61 million) in retained earnings after allocating a portion to its 2023 funds, VietinBank (HoSE: CTG), one of Vietnam’s “Big 4” banks, plans to distribute the surplus as stock dividends. In addition, the bank plans to allocate its retained earnings from 2022, amounting to VND11.52 trillion ($453 million), for stock dividend distribution.

If the central bank agrees to the plan, CTG is projected to issue an extra 2.5 billion shares, raising its total charter capital to VND79.15 trillion ($3.11 billion) from VND53.7 trillion ($2.11 billion).

In late 2023, VietinBank completed the issuance of 564.2 million shares using retained earnings, after setting aside a portion from the 2020 funds, with a view to lifting its charter capital to VND53.7 trillion. As of end-Q1 this year, the lender had VND46.99 trillion ($1.85 billion) in undistributed net income.

Besides stock dividend payouts, several banks intend to issue shares for capital base hikes.

For example, Techcombank (HoSE: TCB), plans to issue 3.52 billion shares this year, sourced from a share premium of VND476 billion ($18.72 million), retained earnings of VND10.56 trillion ($415.49 million), and a reserve fund for charter capital supplementation of VND24.18 trillion ($950.79 million).

BIDV (HoSE: BID), another “Big 4” lender, plans to increase its charter capital by 24% to VND70.7 trillion ($2.78 billion) this year. It intends to issue 1.2 billion shares as a dividend for 2022, and another 165 million shares under a private offering.

Also, it proposed a plan to allot VND12.34 trillion ($485.48 million), or 80% of its remaining profit after a slice was set aside for funds for 2023, for a stock dividend payout. The firm is awaiting approval for its plans from the central bank.

Privately-run VPBank (HoSE: VPB), which has the biggest charter capital in the local banking industry at VND79.34 trillion ($3.12 billion), plans to issue a maximum of 30 million shares under a employee stock ownership plan this year, following a private offering of nearly 1.2 billion shares in 2023. The bank will allocate VND7.93 trillion ($311.96 million) for its dividend payout, with a cash dividend of 10%. It will continue cash dividend payouts over the next five years, said its chairman Ngo Chi Dung.

Data compiled by The Investor showed that only five out of 26 listed banks, including Sacombank (HoSE: STB), had no plans to increase charter capital this year.

The banking group is often referred to as the “king” stock, as its capitalization accounts for around 30% of Vietnam’s stock market.