Banks plan to accelerate

Banks plan

VPBank is optimistic at the moment with the issuance of additional shares to raise capital at the expected issue price. Source: Internet.

VPBank has just approved a plan to increase its chartered capital by 12,000 billion VND in 2018. With this plan, the bank's chartered capital will increase to 27,000 billion VND from 15,706 billion VND at present. Accordingly, VPBank's shareholders have approved the increase of chartered capital from over 15.706 trillion VND to over 27.799 trillion VND through 5 additional share issuances to pay dividends, bonus shares, issued separately for domestic and foreign investors.

Mr. Ngo Chi Dung, Chairman of VPBank said that with the current capital of VPBank, it is enough to ensure the safety norms operating in accordance with the law and the targets of ensuring safety as committed with cooperators. However, the Board of Directors still plans to issue more shares, aiming to mobilize additional capital for VPBank, which is currently favorable and suitable for issuing more capital. The expected release price is good. In fact, the experience of the past few years has shown that it is not always feasible for plans to issue additional capital. Therefore, the Board of Directors must consider and take advantage of these opportunities to increase capital with the goal of continuing to improve financial capacity, abundant capital to grow business as well as prepare for trading opportunities, as well as preparing for merger and acquisition opportunities (if applicable) - is one of the three growth drivers in VPBank's strategy.

Similarly, the General Meeting of Shareholders of VIB has just approved the plan to increase chartered capital to 8,100 billion VND by way of offering treasury shares, issuing new shares, distributing bonus shares from reserve funds to supplement charter capital, development investment funds, retained earnings and equity surpluses. As planned, the additional capital will be used to increase credit to clients with stable financial status, invest in high liquidity assets, invest in material facilities, technology for product development, risk management, as well as investment to upgrade and expand the network. Based on that, VIB set targets for business in 2018 will achieve profit before tax 2,005 billion VND, up 43% over 2017; total assets reached 150,231 billion VND, up 22%; bad debt remained below 3%.

At the General Meeting of Shareholders held in late March, Mr. Vo Tan Hoang, General Director of SCB, said that the bank will increase its chartered capital by 1,705 billion VND according to the roadmap submitted to the SBV, expected to be implemented in the second quarter of 2018, after being approved by the SBV. In addition, SCB also plans to raise capital from its reserve fund and retained earnings of around 600 billion VND or 60 million bonus shares for existing shareholders. Mr. Van said that since the bank is in the restructuring phase of 2015-2019, the dividend payment has not been approved, so the bank uses reserve funds and undistributed profits to increase capital. Thus, the total chartered capital of SCB in 2018 is expected to increase by 2.305 trillion VND to 16.6 trillion VND. By the end of 2019, the bank is determined to complete the target of increasing its charter capital to 18 trillion VND.

Military Bank (MB) also plans to increase its chartered capital from 18,155 billion VND to 21,600 billion VND, expected in the second quarter or third quarter of 2018. Specifically, the bank will issue nearly 345 million shares to existing shareholders to increase charter capital by 19%, equivalent to nearly 3,450 billion VND, including 91 million additional shares to be paid for the second phase of the year 2017, equivalent to 5% and bonus shares at the rate of 14% or 254 million shares. With the additional chartered capital, MB is expected to invest about 1,319 billion VND in capacity investment such as the construction of its head office, branch office, technology investment and other equipment and 1,230 billion VND in operating business activities of the bank.

MB also set strong business growth targets in 2018 as total assets are expected to increase by 11% to 347,600 billion VND; pre-tax profit increased 47% from 2017 to 6,800 billion VND; of which, the bank's own profit was 6,500 billion VND; non-performing loans (NPL) ratio is below 1.5%.

According to experts, besides the income from credit, in 2018 income from banking services will grow strongly. Earlier, in 2017, the report of the National Financial Supervisory Commission showed that net income from banking services increased by 34.7% compared to 2016. In addition to the increase in fees from some credit institutions, they signed exclusive co-operation contracts with large insurance companies with terms of up to 10-15 years, expected to bring in revenue from services and commission in the future. In 2018, the profit forecast of the credit institution system will be positive as the credit growth rate will be stable as in 2017; NPLs are expected to be processed faster and the income of credit institutions will be improved through reversal of provision for bad debt.