Vietcombank’s swelling capital

Vietcombank chairman Nguyen Hoa Binh said the selling of 347 million shares to Mizuho at VND34,000 ($1.6) per share had grown the bank’s bottom line. That, together with the VND995 billion ($47.7 million) capital surplus gained from its equitisation and the VND5.521 trillion ($265 million) in undistributed profits, means Vietcombank had a war chest to go to battle.

Mizuho transferred the capital for its stock purchase to Vietcombank in March, 2012 and assigned Yutaka Abe to serve as its representative on Vietcombank’s board of directors. With such a capital ground, the bank hopes to raise its capital adequacy ratio (CAR) from 9.63 to more than 12 per cent this year.

Many shareholders that earlier purchased Vietcombank shares at a high price wanted dividends in the form of shares, but Binh said the current time was inappropriate for such a payment.

Vietcombank’s shares were priced at VND107,000  ($5.1) per share at its 2007 IPO. As of March 6, 2012 the bank’s share price stood at VND29,300 ($1.4 ), representing a 73 per cent fall. The bank plans to open its own asset management and remittance company later this year.

In 2011, Vietcombank acted as a conduit for $1.4 billion in remittances, 16 per cent of the country’s total of $9 billion last year. The figure dispayed a 12.5 per cent on-year rise in the remittance volume via Vietcombank, providing the impetus for it to open a remittance company. The bank’s subsidiary companies also showed positive business results.

In 2011, VCB Leasing earned pre-tax profits of VND47.8 billion ($2.3 million), an increase of 50.4 per cent against 2010. Vietnam Finance Company in Hong Kong (VFC) and Vietcombank Securities Company saw profits of HKD1 million ($128,770) and VND8 billion ($384,000), respectively.

In 2011, Vietcombank divested in a number of non-core businesses to recoup VND589.4 billion ($28.3 million) that was invested in Shinhanvina Bank, VND5.5 billion ($264,000) in VPF1, VND116.3 billion ($5.6 million) in Vietcapital Bank, VND138 billion ($6.6 million) in SPT and VND120 billion ($5.76 million) in PVTran Pacific.n