The Government submitted a plan to add more than 20,000 billion VND in capital to Vietcombank.

ANTD.VN - The Government has just submitted a document to the National Assembly on additional state capital investment at Vietcombank from the remaining accumulated profits up to the end of 2018 and the remaining profits in 2021.

Vietcombank's capital adequacy ratio is still low.

According to the Government 's report, Vietcombank - along with other state-owned commercial banks - plays a key and leading role in terms of scale, market share, and market regulation capacity, and is identified as the "leading crane" of the finance and banking sector.

However, Vietcombank's current charter capital is 55,891 billion VND, much lower than many private commercial banks such as VPBank (79,339 billion VND), Techcombank (70,450 billion VND) and there is not a big difference compared to some other joint stock commercial banks such as MB (52,871 billion VND), ACB (44,667 billion VND),SHB (36,629 billion VND).

Therefore, if Vietcombank does not increase its charter capital, it will not be able to ensure its leading role and orientation in the banking market. Increasing its charter capital is also the basis for Vietcombank to expand its credit activities, especially in lending to priority areas to support the country's economy.

The additional state capital investment in Vietcombank also aims to create conditions for this bank to meet the minimum capital safety ratios according to current regulations.

Although Vietcombank's capital adequacy ratio (CAR) is still guaranteed (individual CAR is 11.05%, consolidated CAR is 11.39% as of the end of 2023), it is much lower than many private commercial banks in Vietnam (VPBank and MB are 12-13%, Techcombank is 13-15%).

Vietcombank's CAR is also much lower than that of banks in the Asia and Southeast Asia region (the average CAR of Indonesian banks is 23.27%, Thailand is 20.24%, Myanmar is 18.9%, Singapore is 17.1%, Australia is 16.6%...).

Furthermore, Vietcombank's CAR depends largely on the profit after tax, after setting aside funds that Vietcombank is retaining (accounting for about 50% of equity capital), capital-raising bonds (accounting for about 5% of equity capital) and is not sustainable.

Specifically, Vietcombank's individual equity capital as of December 31, 2023 is VND 172,338 billion. However, if Vietcombank has to pay cash dividends for all after-tax profits, after setting aside these funds (VND 74,425 billion) without paying dividends in shares to increase charter capital, the bank's equity capital will only be VND 97,913 billion, the Tier 1 capital ratio and CAR will decrease to 5.64% and 6.28%, lower than the minimum requirement of the State Bank and affect the ability to expand credit due to not ensuring capital safety requirements...

The Government proposed to increase capital for Vietcombank.

Thus, according to the Government, although Vietcombank currently still ensures the capital safety ratio, its equity capital is not sustainable. In addition, with the orientation of continuing to expand credit scale in the following years, Vietcombank really needs to retain the remaining profit after tax and after setting aside funds to increase charter capital to ensure the capital safety ratio (CAR).

Dividend by stock, rate 49.5%

Not only increasing capital to ensure capital safety ratio, according to the Government's report, increasing capital for Vietcombank will help the bank have the potential to continue to promote in implementing the State's policies and supporting the economy. At the same time, it is also a necessary condition for the Bank to have enough resources to support the restructuring of weak credit institutions assigned by the Government and the State Bank...

According to the Government's report, Vietcombank is implementing the Banking Industry Development Strategy and the Project on Restructuring the Credit Institution System in association with handling bad debt in the period 2021-2025. At the same time, the bank also aims to meet the minimum capital requirements according to Basel III standards, in which: CAR reaches 12% in 2024, 13% in 2025 and 13.5% in 2026.

To ensure the CAR target of 13.5% by 2026, the equity capital level as of December 31, 2026 is VND 300,801 billion (corresponding to the expected risk asset scale of VND 2,228,158 billion). Equity capital as of December 31, 2026 is expected to be VND 182,635 billion, an increase of VND 10,297 billion compared to December 31, 2023. Accordingly, the equity capital deficit in the period 2024-2026 to ensure the target CAR is VND 118,166 billion.

In case Vietcombank has to pay dividends in cash, the equity capital deficit will be even higher, about 125,435 billion VND.

Therefore, it is necessary to invest additional state capital from the remaining accumulated profits up to the end of 2018 and the remaining profits in 2021 for Vietcombank to ensure the CAR ratio according to the above Strategy.

Vietcombank builds a plan to increase equity capital for the 2024-2026 period through increasing charter capital to compensate for the equity capital shortage of VND 118,166 billion from two sources: Remaining profit after tax, after setting aside funds for the 2024-2026 period: VND 82,131 billion (through paying dividends in shares) and private share issuance source: VND 32,689 billion.

However, the Government believes that the private issuance plan is still in the promotion stage because the market is not favorable, and the most feasible capital increase plan is to pay dividends in shares.

Therefore, the Government proposed that Vietcombank will issue 2,766,600,173 shares to pay dividends, with a payout ratio of 49.5%. After paying dividends in shares, Vietcombank will have a charter capital of VND83,557 billion.

The source used for issuance and charter capital increase is the accumulated remaining profit up to the end of 2018 and the remaining profit in 2021. Of which, State shareholders are 20,695 billion VND and non-State shareholders are 6,971 billion VND. The proposed implementation time is 2024 and will continue in 2025 if not completed.

Regarding the remaining profits in 2022 and 2023, the State Bank is currently coordinating with relevant ministries and branches to complete procedures to submit to competent authorities to continue investing additional capital for Vietcombank.

Source: https://www.anninhthudo.vn/chinh-phu-trinh-phuong-an-bo-sung-hon-20000-ty-dong-von-cho-vietcombank-post593066.antd