Maximizing Shareholder Returns: Banks Dish Out Dividends and Declare Impressive Figures

HDBank, one of Vietnam’s leading banks, has announced a generous dividend policy for 2023, offering a dividend ratio of 30%, including a 10% cash dividend and a 20% stock dividend. This makes it the bank with the highest dividend payout for 2024.

High Dividends, Significant Capital Increase

HDBank will finalize its list of shareholders on July 15 to facilitate the cash dividend distribution. Regarding the 20% stock dividend, the bank will announce the record date after obtaining approval from relevant authorities. For 2024, HDBank aims for a remarkable pre-tax profit of VND 16,000 billion, reflecting a 21.8% increase from the previous year.

The Board of Directors of SeABank has also approved a plan to issue shares to pay dividends, bonus shares, and shares under the Employee Stock Ownership Plan (ESOP) to increase its charter capital. SeABank expects to issue 329 million shares as dividends for 2023 and allocate 10.3 million shares to increase its capital from equity sources, totaling a ratio of nearly 14%. Following this issuance, SeABank’s charter capital will rise to VND 28,800 billion.

OCB, the Oriental Commercial Joint Stock Bank, has received approval from the State Bank of Vietnam to increase its charter capital by VND 4,110 billion through a stock dividend issuance, offering a 20% dividend ratio to existing shareholders. Post-issuance, OCB’s charter capital will increase to VND 24,658 billion. This year, OCB targets a substantial pre-tax profit of nearly VND 6,900 billion, representing a significant 66% surge compared to the previous year.

Meanwhile, Nam A Bank will finalize its shareholder list on July 12 to issue over 264 million shares from equity sources, with a 25% entitlement ratio, to boost its capital.

Numerous commercial banks, including SHB, VIB, Techcombank, and MB, have been actively implementing dividend distribution plans to strengthen their charter capital. According to these banks, enhancing charter capital is essential to bolster their financial capabilities, expand their scale and competitiveness, and fulfill their ambitions to extend their transaction networks.

Awaiting the Surge

The trend of “racing” to increase charter capital through substantial dividend payouts has propelled the stock prices of many banks to new highs. Investors are optimistic about a wave of rising bank stocks in the latter part of this year.

Mr. Hoang Minh, a resident of District 5, Ho Chi Minh City, shared that he and his friends have been holding VPB shares of VPBank for the last two years. In the first half of 2024, several bank stocks have outperformed, reaching new peaks, such as HDB, ACB, BID, MBB, and NAB, or witnessing significant growth, including CTG, TCB, and the most recent LPB.

“With quite a few bank stocks creating waves and surging in the past, there is a growing expectation that this momentum will extend to other bank stocks, including VPB, which has been consolidating in the range of VND 18,000-19,000 for almost two years,” said Mr. Minh.

Ms. Khanh Thy, a resident of Go Vap District, Ho Chi Minh City, revealed that she purchased NAB shares of Nam A Bank when it officially listed on the HoSE and has held on to them until now. She anticipates that NAB will join the upward trajectory of other bank stocks, especially as several securities companies forecast Nam A Bank’s profits to remain promising in Q2/2024, achieving 50% of its full-year plan.

Commenting on the prospects of bank stocks in the second half of this year, BETA Securities Company believes that the profits of some banks are showing notable improvements compared to the same period last year. The banking industry has overcome challenges and is now preparing capital for a new credit cycle.

In-depth reports from BETA Research assess that the solid performance of banks will continue to strengthen in the latter half of 2024, driven by anticipated credit recovery and enhanced asset quality. Notably, state-owned commercial banks, particularly BIDV and Vietcombank, are in the process of executing private placement plans and issuing subordinated bonds to bolster their capital adequacy ratios (CAR). This positive move indicates that banks are becoming more optimistic about capital absorption in the economy.

“The profits of banks will witness a distinct improvement in the second half of 2024 as credit growth accelerates, supported by robust import-export activities and a rebound in domestic business operations. Consequently, consumer purchasing power will increase, and demand for loans for shopping and consumption will also pick up,” said Mr. Vo Kim Phung, Head of Analysis at BETA Securities Company.

Numerous securities companies forecast the banking industry’s profits in the latter half of this year to grow positively, potentially reaching a 15%-17% increase compared to the same period last year. Meanwhile, many bank stocks are currently trading at attractive valuations, given their promising growth prospects. Therefore, BETA’s experts suggest that bank stocks with robust fundamentals will be a prudent investment choice in the upcoming period.

From another perspective, Mr. Quan Trong Thanh, Director of Analysis at Maybank Securities Company, observes that aside from a few bank stocks like LPB and HDB, which have skyrocketed, many bank stocks remain in an accumulation phase as capital has not yet flowed into this sector. This is because the banking industry still faces challenges due to existing bad debts, declining lending rates, and sluggish credit growth.

“The Q2/2024 financial results of the banking industry will exhibit significant polarization. Only a handful of banks will report outstanding growth of 40%-50%, while the rest will likely show stable but slower growth rates compared to other sectors. Hence, if your investment horizon is less than six months, bank stocks may not be as attractive as those in the technology, energy, or retail sectors,” analyzed Mr. Thanh.