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Banks maintain optimism   2009-04-04 - VNE

The Vietnamese securities market is showing no signs of recovery and, sad to say, share prices are ’very low’. Not surprisingly, when it’s announced that there will be a bank shareholders’ meeting, most shareholders have something better to do at that time.

 

 
Dividends on bank shares have decreased or stopped and banks have to spend more to maintain their operations. However, this has not deterred many banks from presenting optimistic business plans for the year 2009.

 

Bank stock dividends have never been so low. Shares of Nam A Bank in early 2007 were purchased on the OTC (over-the-counter) market for VND82,000 (when originally released, shares sold for VND10,000). But now things have changed.

 

At the end of 2008 the bank paid a 0.47 percent dividend to net stockholders VND47 per share. Those who held 1,000 shares (which some shareholders did purchase for VND80 million) got a dividend of VND4,700. Investors traditionally like high dividends.

 

At a recent Nam A Bank shareholders’ meeting, a dividend rate of 9.5 percent was approved for 2009. Meanwhile Techcombank (Technical and Commercial Joint Stock Bank of Vietnam), Sacombank (Saigon Thuong Tin Commercial Joint Stock Bank), VIB (Vietnam International Bank), ACB (Asia Commercial Bank) and Habubank (Hanoi Housing Development Commercial Joint Stock Bank) are all paying dividends of between 10 and almost 30 percent.

 

It seems also to be true that many shareholders are increasingly interested in share value rather than dividend. They have a growing interest in what the bank’s policies are and they want to know the actual financial situation of the bank. At this time most do not want banks to increase their chartered capital, build new offices or raise the salaries of the heads of the banks.

 

Techcombank has stated that it plans to increase its chartered capital from VND3.64 trillion to VND5.68 trillion, Habubank from VND2.8 trillion to VND3 trillion and Dong A Bank from VND2.88 trillion to VND3.4 trillion. Sacombank plans to increase its chartered capital to VND6.7 trillion. Shareholders do not like to hear this because they feel that such action will not benefit them in any way.

 

Banks have lowered their 2009 targets, now shooting for profits of one to two thirds what they were in 2008. The general director of one bank said, "2009 will be a difficult year for banks. We didn’t reach our 2008 profit targets and we don’t expect that things will be any better this year."

 

Techcombank is predicting that by the end of 2009 it will have assets of VND82.04 trillion and its pretax profits will exceed VND1.6 trillion, VND1 billion more than in 2008. These are predictions. What is a fact is that it lowered its dividend rate from 35.73 percent in 2008 to 20 percent in 2009.

 

Sacombank has set for itself a 2009 profit target of VND1.6 trillion. At the shareholders meeting of the Saigon-Hanoi Commercial Joint Stock Bank (SHB), the following 2009 business-financial plan/targets was adopted: total assets to exceed VND20.50 trillion (42.5 percent higher than in 2008), total deposits of VND16.25 trillion, pretax profits of VND336 billion, a 10.5 percent dividend rate, maximum ratio of bad debt to outstanding debt of five percent, an ROA (Return on Assets) ratio of 1.64 percent and an ROE (Return on Equity) ratio of 16.80 percent.

 

Also adopted was the SHB managers’ plan to distribute profits, to issue convertible bonds to increase the bank’s chartered capital from VND2 trillion to VND3.5 trillion (VND1 trillion for existing shareholders and VND500 billion for foreign shareholders), a gold and securities business plan, the choice of an independent auditing company for the 2009 fiscal year, the establishment of a one-member subsidiary that is to trade in gold, silver and gems, and a plan to modernize the SHB card system.

 

Do Quang Hien, the chairman of the board at SHB, said, "2009 will be challenging but it will also bring many opportunities for SHB. Through this shareholder meeting, SHB has strengthened the trust of investors and the bank is optimistic about its business potential in 2009."

 

The An Binh Commercial Joint Stock Bank (ABBANK) plans to raise its total assets from VND13.74 trillion to VND19.36 trillion, an increase of 41 percent, and its chartered capital from VND2.70 trillion to VND3.48 trillion, up 29 percent. When it does increase its chartered capital, ABBANK plans to purchase new technology and loan out more capital to import-export companies, energy and construction businesses and individuals. ABBANK targets an 82 percent increase in net revenue earned from services and pretax profits of VND400 billion in 2009.


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