Banks continue the "race" to increase charter capital

Increasing charter capital is one of the hot topics every season of the General Meeting of Shareholders of banks. As of the end of the first quarter of 2023, the charter capital of the entire banking system reached VND 876,993 billion.

Of which, the charter capital of the state-owned commercial banking sector accounts for more than 50%, reaching 190,433 billion VND, while the joint stock commercial banking sector has a total charter capital of 469,409 billion VND.

Big 4 Group's Capital Increase Plan

Among the state-owned banks, BIDV is the bank with the largest capital, with current charter capital reaching VND50,585 billion. Of which, the State capital portion is VND40,967 billion, accounting for 80.99% of charter capital.

In 2023, BIDV is planning to increase its charter capital to more than VND61,557 billion in two issuances. Specifically, in the first issuance, the bank will issue nearly 642 million shares to pay dividends to shareholders, accounting for 12.69% of the outstanding shares as of December 31, 2022; charter capital will increase by more than VND6,419 billion.

In the second phase, BIDV will issue or offer to the public more than 455 million shares (expected to be 9% of charter capital as of December 31, 2022). Charter capital under this plan will increase by VND 4,552 billion.

Following BIDV is VietinBank with a current charter capital of VND48,057 billion, of which the State shareholder holds 64.46%. Previously, the 2022 General Meeting of Shareholders of VietinBank approved the plan to increase charter capital from over VND48,000 billion to VND53,700 billion but has not been completed. The source of implementation is from the remaining profit in 2020.

In 2023, VietinBank plans to increase its charter capital by issuing shares to pay dividends from the remaining profits in 2021 and the remaining accumulated profits up to the end of 2016.

If at the time of issuance, VietinBank's charter capital is still at VND48,058 billion, the bank expects the dividend rate to be equivalent to 25.66%. Charter capital will increase to VND60,387 billion.

In case at the time of issuance, the bank has completed the capital increase to VND53,700 billion, Vietinbank will pay dividends at the rate of 22.96%. The charter capital after successful issuance is VND66,030 billion.

Ranked 3rd in the Big 4 group is Vietcombank with current charter capital of 47,325 billion VND, the state holds 74.8% of charter capital.

At the recent 2023 Annual General Meeting of Shareholders, Vietcombank Chairman Pham Quang Dung said that the bank is implementing 3 capital increase contents including increasing capital from 2020 profits and remaining profits of 2019 with an issuance rate of 18.1% approved by the Government.

On April 19, the State Bank approved Vietcombank’s capital increase plan. Accordingly, within about 1 month, Vietcombank will complete the capital increase.

Agribank currently has the smallest charter capital in this group, at VND34,446 billion. However, on April 25, the Government issued a Resolution on additional investment in charter capital for this bank.

Accordingly, the Governor of the State Bank will, on behalf of the Prime Minister, report to the National Assembly on supplementing charter capital for Agribank in the 2021-2023 period by an additional VND 17,100 billion.

The additional capital for Agribank will be taken from the 2023 central budget expenditure estimate approved by the National Assembly, over VND6,750 billion. The remaining VND10,350 billion will be allocated from the State budget and transferred in 2024.

VPBank leads in the largest capital scale in the system

For the private commercial bank group, VPBank is the bank with the largest charter capital in the system with more than 67,000 billion VND.

Not stopping there, this year, VPBank plans to sell 30.2 million ESOP shares at VND10,000/share, expected to collect VND302.2 billion. The expected issuance rate is 0.45%.

Regarding the issuance of shares to increase capital, VPBank will sell 1.19 billion shares to Sumitomo Mitsui Banking Corporation at VND30,159/share, according to the agreement signed on March 27. The amount collected is VND35,904 billion.

After the issuances, VPBank's charter capital will increase to nearly VND80,000 billion, continuing to hold the leading position even though other banks also have plans to increase capital.

The bank ranked second in charter capital in the private banking sector is MB with VND37,983 billion. This year, MB also plans to increase its charter capital to VND53,683 billion by paying dividends in cash and shares.

Other banks also have plans to increase capital this year. Accordingly, LPB wants to increase its charter capital to VND28,676 billion through issuing shares.

TPBank increased its charter capital to VND22,016 billion, equivalent to an increase of 39% through stock dividends.

In addition, SHB increased to 36,600 billion VND; HDBank increased to 29,300 billion VND; VIB increased to 25,368 billion VND; SeABank increased to 20,403 billion VND; Bac A Bank increased to 9,000 billion VND...

Increasing charter capital is necessary, thereby helping banks strengthen their financial potential, increase medium and long-term capital to expand business operations when the ratio of using short-term capital for medium and long-term lending is gradually being tightened.

High charter capital will be a "buffer" to help commercial banks have more resources to cope with difficulties and challenges, especially in the current volatile economic environment, the pressure to increase capital weighs heavily on banks.

The capital increase also creates the basis and conditions for banks to continue supporting businesses in particular and the economy in general to restore production and business activities .

Source