The season of shareholders' general meeting (AGM) of banks has arrived, expected to be completed by the end of April. As in previous years, the issue of dividend disbursement is always the most anticipated and interested by shareholders and investors.

MSB plans to pay dividends in 2021 at the rate of not less than 15%.
Photo: MSB

The rate is up to 40%

Currently, a number of banks have published specific documents on AGMs with many important issues. In particular, on the issue of dividends, in 2020, despite many difficulties due to the Covid-19 pandemic, some banks still offer a high rate of dividend disbursement.

Last weekend (March 12), BIDV opened the AGM season this year and approved all the statements at the meeting, especially the plan to increase its charter capital to more than VND48,500 billion by stock dividends and private placement/public offering. For dividends, BIDV's shareholders agreed with the plan to issue 207.3 million shares to pay dividends in 2019 (at a rate of 5.2%), issue 281.5 million shares to pay dividends in 2020 (at a rate of 7%). The implementation time of stock dividend is expected in the third and fourth quarter of 2021. Before that, at the beginning of 2021, this bank also used more than VND3,200 billion to pay 8% in cash dividend. The amount has been paid as of February 3, 2021.

In addition, according to documents for the General Meeting of Shareholders announced, many banks offer dividend rates of more than 10%, even up to 40%. VIB plans to hold its AGM on March 24. This year, VIB continued to not pay cash dividends, but paid dividends with bonus shares at a very high rate, up to 40% from equity and is expected to issue shares. In 2020, this bank also paid dividends in shares and bonus shares at the rate of nearly 30%.

Similarly, according to the document of the AGM just announced, MSB will submit to shareholders the increase in charter capital from VND11,750 billion to VND15,275 billion by issuing common shares to disburse dividends to shareholders. Specifically, the bank plans to issue 352.5 million shares to pay dividends in 2020, equivalent to a maximum rate of 30% of the total outstanding shares. Not only that, MSB also sets the dividend rate for 2021 (paid in 2022) at not less than 15%.

OCB leaders also said that the bank expects to increase its charter capital this year by about 25%, dividends at about 25%. ACB also plans to issue more than 540 million shares to pay dividends in 2020, equivalent to an implementation rate of 25% (this rate can be adjusted depending on the approval of the State Bank). SHB has just revealed that it plans to pay dividends to existing shareholders at the rate of 20.5% in shares, of which 10% for 2019 and 10.5% for 2020.

In particular, two major banks, Vietcombank and VietinBank, can also make stock dividends this year after Decree 121/2020/ND-CP is amended, allowing state-owned joint stock banks to share dividends.

Therefore, the Board of Directors of VietinBank has also issued a resolution on the organization of the Annual General Meeting of Shareholders in 2021, scheduled to be held on April 16 with the contents of activities in 2020 and orientations for 2021, with plans to distribute profit in 2020.

Recently, VietinBank announced that it has paid 2019 dividend in cash (5%) to shareholders, equivalent to a scale of more than VND1,800 billion. The plan to issue more than 1 billion shares to pay dividend at the rate of 28.7% will be completed at the latest in the first quarter of 2021. Vietcombank also paid 8% of cash dividend in January 2021. At this year's AGM, this bank will submit to shareholders the plan to increase charter capital in 2021-2022, so it is likely that Vietcombank will have a plan to pay dividends in shares.

But in addition, there are still banks that have not paid dividends to shareholders for nearly 10 years, typically Sacombank, Techcombank, etc., making many shareholders angry when banks report trillions of dong of profits per year without dividing their shares.

Strong impact on stock prices

Dividend disbursement has always been a priority for banks in recent years. However, many expressed concern when the business community always faces difficult in accessing credit, and banks still have profits of trillions of dong, meaning that the sharing is not as expected. However, this is clearly the story of the business problem. Because for banks, paying dividends to shareholders is a way for banks to supplement their charter capital, serving the bank's business operations. This year, all banks have proposed to increase capital up to thousands of billions of dong through issuing bonus shares to meet international standards in operations.

Moreover, the dividend disbursement also helps maintain and promote the high price of bank shares and more attractive growth. The fact has proven that information related to dividends from the beginning of the year have a certain influence on the market price of bank shares. For example, in the past three months, SHB shares have been very positive, currently around VND18,000 per share - the highest level over the past 10 years. VIB shares also increased strongly to over VND44,000 per share, compared to over VND33,000 per share at the end of 2020.

In addition, since 2020, banks tend to pay dividends in shares. The reason is that banks are continuing to implement the State Bank's proposal not to pay dividends in cash to reduce costs, spend money to cut interest rates on current outstanding loans and new loans to support people and businesses affected by Covid-19.

According to SSI Research, the profit of banks will grow strongly in 2021, an average increase of 21% thanks to credit expansion, the cost of capital will decrease when the deposit interest rate is low. Therefore, shares of banks are still attractive to investors and shareholders, so that banks can have enough potential and motivation to pay dividends for the next few years.