Techcombank wants to continue not paying dividends

In the annual meeting scheduled to take place at the end of April, the Vietnam Technological and Commercial Bank (VietinBank)Techcombank – TCB) will submit to shareholders a plan to not pay dividends in 2021. The management explained that the above move is to supplement capital for business activities.

The parent bank’s profit after tax was more than VND 15,800 billion last year. This bank is expected to deduct 5% of the reserve fund to supplement charter capital (equivalent to 790 billion VND) and 10% of the financial reserve fund (equivalent to 1,580 billion VND) and 38 billion VND to be put into the welfare fund.

After fund deductions, last year’s remaining profit was more than 13,390 billion dong. Accumulating unused profits from previous years, Techcombank currently has more than VND 40,100 billion of undistributed profit.

If approved, this will be the 11th year this bank does not pay a cash dividend. The last time Techcombank paid dividends in the form of shares was 2018. At that time, each shareholder owning one share will receive 2 new shares. The source of share distribution comes from undistributed profits and capital surplus from the sale of treasury shares.

In 2012, Techcombank’s Board of Directors admitted that the move not to pay dividends made some shareholders unhappy, but in return the stock value and safety indexes would increase. At the 2016 annual meeting, Chairman Ho Hung Anh continued to affirm that the above is to ensure the stock’s value when it goes public in the future.

After listing in 2018, Techcombank still pursues this strategy with the reason that it wants to ensure that the bank is always fully capitalized and does not lose money for external mobilization. This bank also believes that the available profit will ensure long-term safety and be a resource for the bank to expand investment and increase credit.

A leader also once said that investors will benefit from participating in TCB shares in the long term. If you want to buy and sell, this bank stock is not the place to be.

This year, Techcombank’s leaders plan to submit to shareholders for approval the plan of pre-tax profit of VND 27,000 billion, an increase of more than 16% over the same period last year. In the previous year, this bank for the first time recorded a profit before tax that exceeded one billion USD (more than 23,200 billion VND). If the plan is completed, this bank will continue to set a record of profit.

Techcombank is expected to record more than VND 446,500 billion of outstanding loans, up 15% or higher but within the level allowed by the State Bank. NPL ratio is expected to be lower than 1.5%.

In addition, Techcombank will present to shareholders a plan to issue shares under the employee selection program (ESOP). This bank will issue more than 6.3 million shares at the price of 10,000 VND per unit. The proceeds will be used to supplement the bank’s working capital. If approved, this is the 5th consecutive year that Techcombank has issued millions of ESOP shares to employees.

At the upcoming meeting, Techcombank also submitted a resignation letter from Mr. Do Tuan Anh as a member of the Board of Directors for personal reasons and to avoid unnecessary conflicts of interest with the bank. Previously, Mr. Tuan Anh resigned from the position of Vice President. Currently, he is the General Director of KDI Holdings Group, an enterprise owned by the former chairman Sacombank – Mr. Kieu Huu Dung – founded and served as chairman.

Siddhartha