Banks expect big change in charter capital in 2023
Banks expect big change in charter capital in 2023
Charter capital of banks is expected to have a big change this year as four State-owned banks are considering an increase in capital while the State Bank of Viet Nam (SBV) has approved a capital hike for 21 private banks.
On May 22, at the 15th National Assembly (NA)'s fifth session, the NA’s Economic Committee considered the Government's proposal to increase capital by VND17 trillion for State-owned Agribank, and the committee agreed with the Government to include the issue in the fifth session’s general resolution.
Under the Government’s proposal, VND6.75 trillion of Agribank’s capital increase in 2023 will come from the central budget approved by the NA in Resolution No 70/2022/QH15 dated November 11 last year. In 2024, a maximum of nearly VND10.35 trillion for the increase will come from the State budget according to the Law on State Budget provisions.
However, the NA’s Economic Committee suggested it must be clear in the Government’s proposal report that the Government is responsible to the NA for the accuracy of data and the size of additional charter capital for Agribank.
Previously, on the first working day of the 15th NA's fifth session, SBV Governor Nguyen Thi Hong, as authorised by the Prime Minister, presented a report on a policy of additional charter capital investment for Agribank.
The Governor said by the end of 2022, Agribank’s charter capital was more than VND34.44 trillion, the lowest among State-owned commercial banks. The size of Agribank’s charter capital was lower than that of some other joint stock commercial banks such as Techcombank (nearly VND35.2 trillion), MB (more than VND45.3 trillion) and VPBank (more than VND67.4 trillion).
It is worth mentioning that in the past five years, the rate of increase in Agribank’s charter capital was lower than the increase in its total assets, which caused the bank’s minimum adequacy ratio (CAR) to decrease and fail to reach the Government’s regulated level.
In order to ensure the key role, especially with a bank operating mainly in agriculture and rural areas, the Government submitted to the NA a policy to invest an additional charter capital of VND17 trillion for Agribank in the NA's 5th session’s general resolution. If being approved, Agribank's charter capital will increase to more than VND51.4 trillion.
In addition, in the report sent to the NA for the 5th session, the Governor also said the SBV submitted to the Prime Minister a plan to supplement State capital at State-owned Vietcombank through paying dividends in shares from the remaining profits in 2019 and 2020 after paying cash dividends.
The SBV has directed three State-owned banks of Vietcombank, Vietinbank and BIDV to develop a plan to increase charter capital from after-tax profits and after setting aside funds in 2021 to submit to the Prime Minister for approval.
This year, BIDV also plans to increase its charter capital to nearly VND61.56 trillion through paying dividends in shares, private placement or public offering.
Meanwhile, VietinBank this year also plans to increase its capital to VND66 trillion.
Besides the four above State-owned banks, the SBV this year approved an increase in charter capital - mainly from the bank's equity - for 21 joint-stock commercial banks, including VPBank, HDBank, MB, SeABank, ACB, VIB, TPBank, LienVietPostBank, BacA Bank, and VietA Bank, NamA Bank, VietBank, Techcombank, Eximbank, OCB, ABBank, SHB, VietCapital Bank, MSB, NCB, and KienLongBank.
Statistics from the SBV showed by the end of February 2023, the charter capital and total assets of the four State-owned banks Agribank, Vietcombank, VietinBank and BIDV were VND180.4 trillion and VND7.25 quadrillion, respectively.
Meanwhile, the charter capital and total assets of joint stock commercial banks reached VND469.5 trillion and VND7.88 quadrillion.
