Vietcombank to increase capital to US$178 trillion

The largest local commercial bank, Vietcombank (VCB), will increase their charter capital to over VND39.7 trillion (US$178.1 billion), said chairman Nghiem Xuan Thanh at the bank's general shareholder's meeting on April 15. Thanh said the added capital of VND9.3 trillion was from the issuance of 933 million bonus shares at the rate of 35 per cent for the existing shareholders of the bank.
He said that after raising charter capital, the bank will offer foreign investors about 360 million shares or a 10 per cent stake, which will be taken from its two biggest shareholders, the State and Mizuho Bank of Japan. Thus, the state would reduce its stake in the bank from 77 to 70 per cent, and Mizuho Bank's stake would fall from 15 to 13 per cent.
Thanh said that by the end of Q1, the VCB's capital source had increase by 2.7 per cent, higher than the average growth in the banking industry. Chairman Thanh said despite offering the lowest interest rates in the market, its brand and competitive products helped the bank's capital to grow.
Credit within the quarter also increased by 6.5 per cent, while the non performing loans (NPL) ratio was down slightly by 1.76 per cent from the beginning of the year. The bank also reported profits before tax of VND2.3 trillion, up 61 per cent over the same quarter last year.
By the end of 2015, the total assets of the bank had reached VND674 trillion, up 16.9 per cent compared to the beginning of the year. The total profits before tax reached VND6.8 trillion. This year, VCB expected to earn VND7.5 trillion in profits, a 10 per cent increase from 2015.
Shareholders of Vietcombank have already received a 10 per cent cash dividend worth VND2.7 trillion for 2015, and the bank plans to pay a dividend of 10 per cent in cash this year as well.
The bank also planned to pay 0.35 per cent of its profit margin to its director board and supervising board this year. So with the target of VND7.5 trillion, leaders of the bank were expected to have a combined income of VND26.5 billion this year.
Even before the additional capital, the bank already was the largest bank in charter capital in Viet Nam with VND112.7 trillion, second only to Vinamilk on the Vietnamese stock market.
However, Vietcombank said it did not just aim to be the No 1 bank in Viet Nam, but also to be placed in the top 300 financial banks with the best management in the world by 2020.
With more capital, the bank said it would spend VND1 trillion in infrastructure investment including the construction of office buildings, expanding its network and upgrading technology. It would also spend VND500 billion investing in its existing companies as well as in other profitable projects.
The bank also plans to spend VND11.5 trillion expanding credit activities, capital venture projects and other business activities. The bank would establish companies specializing in credit, remittance and research the establishment of an asset management company, as well as open more branches and representative offices in foreign countries.
The bank said it would also consider spending on M&A activities this year.
Currently, Vietcombank holds a 7 per cent stake in Military Bank (MBB), an 8.2 per cent stake in Export and Import Bank (EIB), a 5 per cent stake in Orient Commercial Bank (OCB), a 4.3 per cent stake in Saigonbank and more than a 10 per cent stake in Cement Finance Company.
The bank said it would keep the investment in MBB because of its effective business, adding that it would not divest in either OCB or in Saigonbank as the investment of VND100 billion in the banks was quite small compared to their total assets. Meanwhile, it also planned to find mergers in order to boost the strength of the bank.
On April 15, VCB shares rose 0.5 per cent to end at VND42,500 each on the HCM Stock Exchange.

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