With impressive financial performances in the fourth quarter and throughout 2023, several banks are considering distributing cash dividends to their shareholders.
Profit targets met
Vietcombank is estimated to have a consolidated pre-tax profit of approximately VND41.2 trillion for 2023, whereas its standalone profit may be higher than VND40.4 trillion, as per the bank’s preliminary report on its business operations last year. With such results, Vietcombank has set a new profit record in the banking sector. BIDV ranks second among state-run joint stock banks, reporting a consolidated pre-tax profit of over VND27.4 trillion for 2023. Agribank expects a pre-tax profit of VND25.3-25.4 trillion for the whole of 2023, a 15% increase from the previous year. VietinBank’s 2023 profit surpasses its target.
Among large- and medium-sized private joint stock banks, MB reported a standalone profit of nearly VND24.68 trillion in 2023, a 22% year-on-year increase, with a consolidated profit of VND26.2 trillion, up 15%. Techcombank achieved a pre-tax profit of VND22.9 trillion, exceeding its target. VIB’s profit before tax exceeded VND10.7 trillion, a slight increase of 1% compared to 2022, resulting in a 25% return on equity (ROE).
In total, seven banks reported profits exceeding VND10 trillion: Vietcombank, BIDV, MB, VietinBank, Agribank, Techcombank, and VIB. ACB, VPBank, HDBank, and SHB are also expected to join this group with profits of more than VND10 trillion for 2023.
Among smaller private joint stock banks, LPBank recorded a pre-tax profit of approximately VND3.35 trillion in the fourth quarter of 2023, up by a staggering 287% year-on-year, bringing its full-year pre-tax profit to nearly VND7.04 trillion, up 24%. This is one of the banks with the highest growth in the final quarter of last year.
SaigonBank reported a pre-tax profit of VND84 billion for the fourth quarter of 2023, compared to just VND1 billion in the same period in 2022. SaigonBank’s pre-tax profit in all of 2023 was therefore VND332 billion, an increase of 40%. BacABank achieved positive results with a pre-tax profit of VND485 billion in the fourth quarter, a 50% increase, and over VND1.03 trillion for the entire year, matching its 2022 figure. TPBank, however, experienced a significant year-on-year decline of 67% in its profit before tax, mainly due to increased provisioning. Consequently, TPBank’s pre-tax profit for 2023, at nearly VND5.59 trillion, is substantially lower than its 2022 profit of around VND7.82 trillion.
Plans for cash dividends drawn up
With the robust financial performances of banks in 2023, some institutions are outlining plans to distribute cash dividends to their shareholders, sparking interest among investors.
Techcombank is planning a cash dividend of around VND1,500 per share. Previously, the issue of cash dividends has been consistently raised by the bank’s shareholders during general meetings over the past decade. In April 2023, the chairman of Techcombank indicated that changes were likely to occur, with 2023 being the final year without cash dividends.
VIB is also among the early banks to reveal its cash dividend plan for 2024. The bank will allocate over VND1.5 trillion for cash dividends in advance at a rate of 6% to its existing shareholders for their 2023 dividends. Shareholders will receive VND600 per share, with the dividend payment scheduled for February 21, 2024. In 2023, VIB paid dividends twice in March and May at 10% and 5%, respectively. Additionally, the bank issued stock dividends at a rate of 20% to bolster its charter capital and distributed an extra 7.6 million shares to its employees through its ESOP in June 2023, increasing its charter capital to over VND25.36 trillion.
During the 2023 annual general meeting of shareholders, senior leaders of VPBank committed to paying cash dividends for five consecutive years, amounting to 30% of its annual profit after tax. In 2023 alone, VPBank allocated nearly VND8 trillion as dividends to its shareholders. Cash dividends for subsequent years are expected to be paid out earlier by VPBank.
Apart from VIB and VPBank, three other banks, namely ACB, HDBank, and MB, will also partially distribute their 2023 dividends in cash.
For shareholders, the issuance of cash dividends is a welcome development, especially considering that bank stocks have exhibited a more subtle rise compared to other stock categories. This year’s positive market performance, with bank stocks leading the way with gains of 15-20%, further enhances the appeal of cash dividends. Nevertheless, from a management perspective, banks are encouraged to pay stock dividends to bolster their capital, fortify their capital reserves, and enhance their financial resilience against future risks.
Unlike three years ago when the Covid-19 pandemic was rampant, prompting the State Bank of Vietnam to mandate share dividends to boost capital and preserve resources for addressing bad debts, top-rated banks are no longer constrained from paying cash dividends this year. This favorable condition enables banks to proceed with their cash dividend plans after years of distributing stock dividends, potentially acting as an additional catalyst to sustain the upward trajectory of their stock prices.
