Billions of banking stocks are about to flood the market with banks planning to pay stock dividends and issue new shares to raise their charter capital.

A Military Bank branch in Hanoi

The Hanoi Stock Exchange (HNX) has approved the additional listing of more than 498.8 million shares in Asia Commercial bank (ACB), which will be issued to pay dividends to its shareholders next month. Once completed, the bank’s charter capital will increase to nearly VND21.62 trillion (US$932 million) from VND16.63 trillion.

Despite being the largest listed bank on the HNX, the HCM City-based lender is planning to shift to the Ho Chi Minh Stock Exchange (HoSE) in the last two months of this year. The bank's share value is expected to rise after the move as it will be eligible to be added to the sub-indices on HoSE such as the VN30, VNDiamond, VNFinSelect and VNFinLead.

Military Bank (HoSE: MBB) has also sent confirmation to the State Securities Commission (SSC) of its plan to pay dividends in shares. This bank is planning to pay a 15% dividend in the form of stocks and 25.6 million of its treasury shares.

After the issuance, expected in the fourth quarter of this year or the first quarter of 2021, more than 385 million MBB shares will be traded on the stock market.

HDBank also announced that October 2 will be the deadline for existing shareholders to register to receive their dividends and bonus shares for 2019. The bank will issue nearly 290 million shares to pay dividends and distribute bonus shares at a rate of 30%.

Once completed, HDBank's outstanding shares will increase to nearly 1.3 billion shares.

Banks issuing shares to pay dividends also include Sai Gon-Hanoi Bank (HNX:SHB), Bac A Bank (BAB) and LienVietPostBank (LPB), with the latter two trading on the Unlisted Public Company Market (UPCoM). These lenders are planning to pay dividends in the form of stocks at a rate of 9-20%.

Meanwhile, state-owned banks such as Vietcombank (HOSE:VCB) plans to pay 2018 dividends at a rate of 18%, equivalent to 676.6 million shares, in the third or fourth quarter. BIDV (HOSE:BID) and Vietinbank (HOSE:CTG) also want to issue shares to pay dividends, along with bonus shares.

The State Bank of Vietnam has directed banks not to pay cash dividends this year to reserve resources to deal with the effects of the COVID-19 pandemic, focusing on lowering interest rates to support businesses.

Raising capital through dividends or issuing additional shares is also necessary for the banks to improve their financial capacity given that bad debts are expected to increase post-pandemic.

New listings

Vietnam Maritime Bank (MSB) is applying to list on HoSE. If approved, the market will welcome 1.17 billion shares. MSB is currently trading on the Over-The-Counter (OTC) market.

Vietnam International Bank (UPCoM:VIB) has also sent listing documents to HoSE. Investors expect the bank could trade 924.5 million shares in the last quarter of this year.

Banking stocks have been on the radar of investors in recent times. Many shares have gained 10-40% since August, such as VIB (44%), LPB (37%), SHB (29%) and MBB (23.5%).

According to BIDV Securities (BSC), switching stock markets will likely help re-evaluate the value of banks such as ACB, VIB and LienVietPostBank due to more transparency in information. This will also help the banks to approach more investors, facilitating their plans to raise capital.

Meanwhile, SSI Research expected better profit prospects next year would support prices of banking shares.

State-owned banks' 2021 profits were forecast to increase by 23%, while joint-stock commercial banks would increase by 11.2%, according to the report.