Many banks do not pay dividends despite profits of thousands of billions

The dividend story always attracts investors during each Annual General Meeting season, but bank shareholders have mixed feelings: some are happy, others disappointed, waiting for a signal.

Eagerly awaiting the "sweet fruits" of our labor.

As the annual general meeting season approaches, bank shareholders are once again excitedly anticipating the "sweet fruits" of dividends. For many stock market investors, this is also one of the most anticipated parts of the year.

Ms. Hong Ngoc (46 years old, Dong Da district, Hanoi) excitedly shared: "I mainly invest in stocks to wait for dividend payouts like this. This year,ACB paid a high 25%, and finally, the fruits of my labor for the whole year are finally reaping the rewards."

Dividends are a portion of after-tax profits distributed to shareholders of a joint-stock company. Dividends can be paid in cash, shares, or both.

With positive business results, the banking sector as a whole is quite generous in paying dividends, with many banks offering rates as high as 20%.

Techcombank (TCB, HOSE) has announced a dividend payout ratio of 15%, expected to be implemented in the second and third quarters of 2024. In addition, TCB has submitted a plan to issue shares from its equity capital to reward shareholders at a rate of 100%.

Additionally, VIB (VIB, HOSE) offered a total dividend payout ratio of 29.5% (12.5% cash dividend and 17% bonus shares). ACB, HDBank , and Nam A Bank all had a dividend payout ratio of 25% (including cash and shares).

Despite earning trillions in profits, no dividends were distributed.

"I've been waiting for years and still haven't seen the bank announce a dividend payment plan, while profits continue to increase steadily. This is quite confusing and frustrating for me, and I don't know how much longer I can be patient," said Phuong Mai (27 years old, Thanh Xuan district, Hanoi).

Ms. Mai's sentiment reflects the reality for many investors today, because despite making profits, even substantial ones, some banks have decided not to pay dividends in 2024.

"The stock market has been very volatile this past year, and I was most eagerly awaiting the dividend payment, which is why I patiently stayed. But in the end, the bank announced they wouldn't be paying dividends," sighed Hai Yen (28 years old, Thai Binh).

Sacombank (STB, HOSE) is a prime example of a bank that, despite high profits, has decided to postpone dividend payments. Thus, for the past nine years, Sacombank has consistently "neglected" paying dividends to its shareholders.

According to the profit distribution plan for 2023 as presented in the General Shareholders' Meeting documents, after deducting taxes and fund allocations, the remaining profit last year was VND 5,717 billion. Retained profits from previous years amounted to VND 12,671 billion. Thus, the total accumulated retained earnings of the bank currently stand at VND 18,387 billion.

The 2023 financial report shows positive business performance at STB, achieving 104% of both revenue and profit targets, reaching VND 22,072 billion and VND 7,719 billion respectively, a significant increase compared to the same period.

Business performance at Sacombank over the past 10 years.

Nhiều ngân hàng không trả cổ tức dù lãi nghìn tỷ- Ảnh 1. — Sacombank's business results continue to grow steadily (Source: Compiled Financial Statements)

Previously, at the 2023 annual general meeting, in response to a shareholder's question about dividends, Sacombank's Chairman of the Board, Mr. Duong Cong Minh, stated that Sacombank is a special bank undergoing restructuring and therefore cannot yet distribute dividends.

Next, ABBank (ABB, HOSE) announced it will not pay dividends this year, having experienced a less than favorable economic year with profits declining by 66.6% compared to the same period last year.

Specifically, at the 2024 Annual General Meeting of Shareholders, ABBank proposed to retain all remaining undistributed profits to supplement capital for implementing plans and strategies and creating internal accumulation to increase charter capital in the future. This means that shareholders this year will not receive dividends. ABB's total undistributed profits are currently VND 1,840.7 billion.

The Chairman of the Board of Directors of ABBank explained that the bank needs to invest money to build a foundation, and therefore hopes shareholders will be patient to reap the rewards, as the strategy cannot be achieved quickly and requires time and patience.

TPBank (TPB, HOSE) has also announced that it has not proposed a dividend payout this year.

Notably, LPBank (LPB, HOSE) also announced in its shareholder meeting documents on April 17th that it will not pay dividends for the next three years. The main reason is to build a foundation and strengthen its financial capacity by using profits to supplement working capital. The remaining profit amounts to over VND 4,345 billion.

Furthermore, Saigonbank (SGB, UPCoM) shareholders are concerned that SGB will not pay dividends this year, as SGB did not mention a profit distribution plan in its 2024 annual general meeting documents.

Source