The Annual General Meeting Season: Insights into Vietnam’s Banking Sector
Capital Race Takes Center Stage
As Vietnam’s banking sector embarks on its annual general meeting (AGM) season, a dynamic atmosphere fills the air, characterized by pivotal discussions on capital increases, mergers and acquisitions (M&A), foreign investments, and leadership changes. This season showcases not only the ambitions of banks but also the strategic maneuvering as they gear up for the next growth cycle.
A significant theme emerging is the race among State-owned banks to boost their charter capital. With VietinBank and BIDV scheduled for their AGMs on April 24, and Vietcombank following later in the month, attention is drawn to their agendas. Despite being some of the largest lenders by total assets, these State-owned banks lag in charter capital when compared to several private banks. Notably, Vietcombank stands out, having issued a 49.5% stock dividend earlier this year.
The disparity in capital reflects the lengthy approval processes State-owned banks face, particularly when issuing new shares. However, new policies like Resolution 79-NQ/TW signal a more favorable environment for capital expansion. This resolution permits these banks to retain post-tax profits, enabling them to reinvest and fortify their capital bases instead of divvying up dividends. Analysts anticipate that this change will reinforce capital adequacy ratios, positioning State-owned banks favorably ahead of heightened public investment during 2026–30. According to Phạm Thị Hoàng Anh from the Banking Academy of Vietnam, this policy is set to enhance capital sustainability.
Private Banks Join the Race
Not just the giants of the banking sector, but private banks are also aggressively pursuing growth. Institutions like Asia Commercial Bank (ACB), An Binh Bank (ABBank), LienVietPost Bank (LPBank), and Nam A Bank are expected to propose stock dividends or share issuance plans at their upcoming AGMs. Many private lenders have recently completed substantial capital expansions, including Vietnam Maritime Bank (MSB) and Ho Chi Minh City Development Bank (HDBank), signifying a trend toward a more robust financial foundation across the sector.
M&A Activity Heats Up
Alongside capital increases, the AGM season features heightened interest in potential mergers and acquisitions. A standout deal under scrutiny is BIDV’s planned private placement, which could garner more than VNĐ10 trillion (about $379 million), reflecting strong interest from various investors. Moreover, Vietcombank is contemplating selling approximately 6.5% of its shares, potentially bringing in $1.3–1.4 billion if executed.
In the private banking sector, significant sales are on the horizon as Sacombank prepares to offload 32.5% of shares tied to previous shareholders and the Vietnam Asset Management Company. Foreign investment prospects are also prevalent; VIB is on the lookout for new partners following the exit of Commonwealth Bank of Australia, while SHB is exploring options to attract strategic investors as part of its growth strategy.
Leadership Changes on the Horizon
The AGM season is not solely about finances; leadership transitions are also taking center stage. Eximbank, for instance, is set to replace six out of its seven board members at its forthcoming AGM, reflecting a shift in governance aimed at revitalizing the bank’s operations. Similarly, newly appointed chief executive Nguyễn Đức Thụy at Sacombank marks a pivotal moment as the bank approaches the final stages of its restructuring.
Ambitious Growth Targets Despite Challenges
Looking ahead, banks are setting ambitious targets for profit growth in 2026, even in the face of economic headwinds. HDBank aims for a pre-tax profit exceeding 30%, while VPBank has set a consolidated pre-tax profit goal of VNĐ41.3 trillion, a 35% increase year-over-year. Meanwhile, MB targets approximately VNĐ39.5 trillion, with both credit and deposit growth projected at around 35%.
This optimism follows a successful year for the banking sector, where the profits for 27 listed banks surged by nearly 19% year-on-year. However, analysts caution that challenges such as tighter credit growth limits, rising funding costs, and increasing non-performing loans could pose hurdles to these ambitious targets.
In conclusion, while the banking sector is navigating through a maze of opportunities and challenges, many analysts predict that profits could still rise by about 20% this year. Improved net interest margins and a gradual recovery in loan demand could serve as the tailwinds driving this growth. As Vietcombank Securities JSC suggests, it’s a transformative time for the banking landscape, making the upcoming AGMs critical events to watch.