Recently, the State Bank of Vietnam (SBV) approves in writing Saigon – Hanoi Bank (SHB) to issue stock dividend with 18% dividend payout ratio and the Employee Stock Ownership Plan (ESOP). After implementing the above two options, the charter capital of SHB will increase from VND 30,674 billion to VND 36,645 billion, remaining one of the five largest private commercial joint stock banks in terms of charter capital in the banking sector.
The State Bank of Vietnam (SBV) issues Official Letter No. 4629/NHNN-TTGSNH dated June 15th 2023 that allows SHB to increase its charter capital by 5,971.6 billion VND in accordance with the charter capital increase plan approved by the General Meeting of Shareholders of SHB. The charter capital increase options include issuance of stock dividend with 18% dividend payout ratio from 2022 net profit after tax and setting aside funds and ESOP.
During its operation, SHB always strictly follows prudence and transparency requirements such as sustainable profitable growth and steady charter capital increase over the years. SHB prudence, liquidity and risk management indexes exceed those prescribed by the SBV and international standards.
SHB always ensures the shareholders’ interests through regular dividend payment with the annual payout ratio between 7 and 15%, remarkably 18% in 2022. The increase in charter capital plays a critical role to improve financial capacity, build competitive advantage in the economic integration and especially meet the expectation of shareholders.
Issuing ESOP is to strengthen employee and the bank relationship, attract and retain talents and enhance productivity, which performs as the driving force to achieve SHB strategic objectives.
In 2023, the target profit before tax is set at more than VND 10,600 billion, up 9.67%; total assets grows by 10.09%, customer deposit 14.78%, total loan outstanding 14%. The forecasted dividend payout ratio is 15% and the charter capital is projected to reach more than VND 40,000 billion.
By the end of the first quarter of 2023, total assets amounted to VND 570,194 billion, customer deposit VND 440,359 billion, total loan outstanding VND 422,175 billion. Total operating income reached VND 6,204 billion, up 32.2%. Net profit equal to VND 4,994 billion, a 35% year-on-year increase, puts SHB in the highest profit growth group in the banking sector. Despite this year’s provision for non-performing loan 3 times as much as that of last year, SHB still achieved profit before tax of VND 3,620 billion.
Business efficiency and prudential as well as sustainable development help SHB increasingly affirming its prestige and brand in the international market. The international credit rating agency Moody’s Investors Service (Moody’s) announced an update on SHB’s rating. Moody’s maintains the B1 rating for SHB as the global market has been characterized by wide fluctuations and huge challenges in 2022 and early 2023. “The affirmation of SHB’s B1 rating and b2 BCA reflects Moody’s expectation that the bank’s credit profile will remain stable over the next 12 to 18 months. The b2 BCA also considers the bank’s capital and liquidity.” emphasized Moody’s.
Recently, SHB also completed the transfer of 50% of SHB Finance’s charter capital to Krungsri – Thailand in the process of divesting 100% of the charter capital in accordance with capital transfer agreement. In the next three years, SHB will transfer the remaining 50% shares to Krungsri. This deal provides a significant capital surplus to SHB shareholders, fosters the Bank’s financial capacity and fundamental factors and promote business activities in key segments, especially enabling massive investment in digital transformation and promise numerous business growth opportunities in the region…The funding from the agreement also helps SHB to strengthen its capital buffer – one of the bases to accelerate Basel III implementation and the application of International Financial Reporting Standards (IFRS) in 2023.
In addition, any large financial institutions such as WB, ADB, IFC, KFW… have promoted cooperation with SHB through grants and investment deals worth hundreds of millions of USD. Recently, SHB and IFC signed a senior loan agreement. The two parties signed the first tranche in a 3-year senior loan package of 120 million USD on IFC’s own account. In addition, IFC – a member of the World Bank Group will continue to promote an additional loan package mobilized from international lenders. The loan would aim to assist SHB with expanding its small and medium-sized enterprise (SME) loan portfolio, which includes women-owned businesses and those involved in the supply chain. The partnership with IFC and many other international financial institutions recent years both demonstrates SHB reputation and capacity in international financial market and confirms the Bank’s strategy of stable and sustainable growth in compliance with prudential regulations and comprehensive international standards.
Increased financial capacity shall facilitate heavy investment in IT, improve corporate governance and continuously expand SHB presence. Therefore, the Bank can realize the goal of becoming Top Performing bank, the leading and the most popular digital bank in Vietnam.