The Biggest Bank in Vietnam Plans to Pay 21% Dividend in Early 2025, Preparing for Private Placement

BIDV Plans to Pay Dividends and Conduct Private Placement in Early 2025

According to VDSC, BIDV is awaiting approval from the State Bank of Vietnam for its capital increase plan and is in talks with potential investors to complete a private placement (2.9% of charter capital) in Q1/2025. The value of this issuance has not been disclosed. The remaining amount, approximately 6.1% of charter capital, will be issued depending on market conditions and the search for investors will continue.

Following the successful issuance, BIDV will improve its CAR ratio (currently 9.2%), but this may lower ROE if profits do not grow proportionally.

Additionally, BIDV will increase its charter capital by paying dividends in shares (21% ratio) once approved by the Ministry of Finance, expected to be completed in early 2025.

Previously, at the 2024 Annual General Meeting of Shareholders, BIDV approved the issuance of 1,361 million shares, with a par value of VND 10,000/share, to increase its charter capital from over VND 57,004 billion to over VND 70,624 billion.

Of these, 1,197 million shares will be issued as dividends for 2022 (21% ratio, where shareholders owning 100 shares will receive 21 new shares), and 164 million shares will be offered through private placement. The capital increase will be funded by VND 11,970 billion from retained earnings in 2022 after allocating to various funds, and approximately VND 1,648 billion from the private placement of shares, expected to be around 2.89% of charter capital as of December 31, 2023.

BIDV stated that the private placement will be offered to professional securities investors and institutional investors, including domestic and foreign investors, and may include some existing shareholders of BIDV.

The offering price will be determined based on market principles, and the privately placed shares will be restricted from transfer for 3 years for strategic investors and 1 year for professional securities investors from the completion of the offering.

BIDV Targets Profit Growth of at Least 10% in 2025

VDSC also noted that BIDV intends to utilize the full credit growth limit approved by the State Bank of Vietnam, which is 14.04% (credit growth as of the latest period is approximately 11%).

Regarding the market-wide interest rate outlook, BIDV expects a slight increase of about 0.25 percentage points in deposit rates towards the end of the year due to seasonal factors to meet the typically higher credit demand during this period. However, BIDV does not plan to increase deposit rates from now until the end of the year.

On asset quality, BIDV believes that non-performing loans have peaked in Q3 and is committed to maintaining the non-performing loan ratio below 1.4% by the end of the year.

In terms of pre-tax profit, BIDV aims for a growth of approximately 10% for the full year. This implies a Q4/2024 pre-tax profit growth of about 6% year-on-year to around VND 8,400 billion, according to VDSC.

Looking ahead to 2025, BIDV will continue to focus on retail lending, in line with the bank’s strategic orientation. Additionally, BIDV expects a recovery in credit demand from this segment.

BIDV also forecasts a slight upward trend in interest rates (maintained between 5.25%-5.5% for 12-month term deposits), in line with the recovery of credit demand. Meanwhile, NIM is expected to improve compared to 2024 due to the recovery in credit demand, especially in the retail segment, and the implementation of plans to increase the CASA ratio.

On the exchange rate front, the bank anticipates a 2-3% appreciation of the VND against the USD, without significant pressure as witnessed in 2024 (currently at 4.5%), as the Fed continues to cut interest rates and foreign currency inflows from FDI and exports remain positive.

Given these forecasts, BIDV sets a target for pre-tax profit growth in 2025 to be no lower than that of 2024 (at least 10%).