Banks focus on increasing charter capital in second half of year

Banks focus on increasing charter capital in second half of year

To boost capital, banks are issuing dividend stocks, making private placements, and selling shares to foreign investors.

Many banks choose to issue bonds as an effective solution to attract more medium- and long-term capital. Photo vietnamfinance.vn

The race to increase charter capital in the banking industry is in a vibrant period and will continue in the remaining months of 2025, when a series of banks are approved to raise capital worth thousands of billions of Vietnamese đồng.

To increase capital, banks are applying many different plans, the most popular of which are issuing shares to pay dividends, making private offerings and issuing shares to foreign investors.

Banks are also choosing to issue bonds as an effective solution to attract more medium- and long-term capital.

A series of banks have recently had their charter capital increase plans approved by authorities.

For example, the State Bank of Vietnam (SBV) has recently approved SHB to issue shares to pay dividends in 2024 to existing shareholders, at a rate of 13 per cent.

After completion, SHB's charter capital will increase from nearly VNĐ40.66 trillion to more than VNĐ45.94 trillion, maintaining its position in the top five largest private joint stock commercial banks in the banking system.

In addition to the banks that have been approved by the SBV to increase their charter capital, a series of banks have planned to increase their charter capital this year, according to the plans approved by the banks’ general meeting of shareholders.

For example, Nam A Bank plans to increase its charter capital from more than VNĐ13.7 trillion to more than VNĐ18 trillion through issuing shares from equity capital to pay dividends and issuing ESOP shares.

VietinBank also plans to issue nearly 2.4 billion shares to pay dividends in shares at a rate of 44.64 per cent. Thereby, the bank’s charter capital can increase from VNĐ53.7 trillion to VNĐ77.67 trillion.

According to analysts, the charter capital increase is an essential need for banks to improve capital adequacy ratios and consolidate financial foundations, expand growth space, invest in digital transformation, develop new products and enhance competitiveness in a business environment that increasingly requires high operational efficiency and flexible adaptability.

Although charter capital is always supplemented, the capital adequacy ratio (CAR) of Vietnamese banks is still lower than the average rate of the regional peers. With the roadmap to increase the CAR to 10.5 per cent in the coming years, according to the SBV’s regulations, commercial banks must proactively increase capital to meet requirements and ensure operational safety.

Dr Châu Đình Linh from the Banking University of HCM City said that the capital increase of banks is becoming increasingly urgent. Some banks need to increase capital to meet the SBV’s roadmap of Basel II and Basel III international banking standards in the future.

Dr Nguyễn Hữu Huân, a lecturer at HCM City University of Economics, said that although the capital increase process of banks has been continuous in recent years, the CAR ratio of Vietnamese banks is still much lower than that of the region.

Regarding the method of capital increase, Huân said that increasing capital through retained earnings is a reasonable solution in the current period. In addition, banks should also promote capital raising through the issuance of new shares, while strengthening financial capacity by issuing long-term bonds.

According to experts, in addition to maintaining the capital safety ratio, capital from issuing bonds also supports banks’ long-term loans, thereby meeting the ratios prescribed by the SBV.

The trend of digital transformation and simplification of administrative procedures requires banks to have a strong technology platform, which requires large capital for banks to maintain competitiveness. Large charter capital helps banks enhance their reputation, consolidate their position in the market, and have more resources to invest in new technology, products and services to attract customers.

It can be seen that the race to increase charter capital is not only a trend but also a mandatory requirement for banks to maintain financial capacity, meet international standards and support sustainable economic growth.

This trend is expected to continue strongly in the future, when banks have to balance the credit growth target and ensure asset quality, especially in the context that the Government sets a minimum GDP target of 8 per cent. The central bank targets to promote credit growth for the whole year to 16 per cent in order to support capital flow for the economy. 

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