Vietnam banks rush to raise capital on positive outlook

A slew of Vietnamese banks have planned to increase their charter capital in anticipation of a positive outlook for 2025.

Saigon-Hanoi Commercial Joint Stock Bank has received approval from the State Bank of Vietnam (SBV), the country’s central bank, to issue nearly 403 million shares as an 11% dividend payout.

Upon completing the issuance, the firm, listed on the Ho Chi Minh Stock Exchange as SHB, is expected to raise its charter capital from VND36.6 trillion ($1.44 billion) to VND40.65 trillion ($1.6 billion).

In December 2024, Bac A Bank (HoSE: BAB) was okayed to increase its charter capital by nearly VND1.6 trillion ($62.2 million) to VND10.53 trillion ($415.3 million). The bank plans to use retained earnings and conduct a private share issuance to achieve this goal.

In November 2024, National Citizen Commercial Joint Stock Bank (HoSE: NVB) doubled its charter capital, raising it from VND5.6 trillion ($220.7 million) to VND11.8 trillion ($465.1 million). This was achieved by issuing 617 million shares via private placement to 12 individual investors and an investment fund at a price of VND10,000 ($0.39) per share.

LPBank (HoSE: LPB) also approved a plan to expand its charter capital to VND29.87 trillion ($1.18 billion) this year. The bank will issue approximately 430 million new shares at a rate of 16.8% as dividends, using its retained earnings as of December 31, 2023.

Increasing charter capital will enhance banks’ financial capacity and competitiveness. Additionally, the move will help them comply with a draft circular issued by the SBV, which proposes raising the minimum capital adequacy ratio for banks and foreign bank branches to 10.5% by 2033.

Yuanta Vietnam Securities forecast that credit growth in the banking sector will reach 15% in 2025, fueled by a recovery in the real estate market in the second half of 2024 and a surge in domestic consumption.

Funding costs could increase by 10-50 basis points, as liquidity faces pressure from a stronger U.S. dollar, the broker predicted. Net interest margins (NIMs) could remain stable or experience a modest increase of about 5-10 basis points in 2025, supported by rising lending rates, it added.

Additionally, asset quality is expected to improve. Since most of the collateral assets held by banks are in real estate, a recovering real estate market will enhance liquidity and facilitate the sale of collateral to address bad debts. Therefore, a revival in the real estate market could drive higher valuations for bank stocks in 2025, Yuanta remarked.