Capital hikes test lenders on Basel III

Rising banking capital signals urgent preparations to meet Basel III capital adequacy standards, while raising fresh concerns over dilution pressure and near-term stock price prospects.

- By Ha Truc

A series of lenders have unveiled plans for charter capital increases and generous dividend payouts, with some institutions proposing payout ratios exceeding 30 per cent, a level rarely seen in recent years.

Among state-owned banks, shareholders of BIDV approved a plan to raise charter capital by more than $864 million through bonus share issuance, dividend payments, and private placements, bringing total charter capital to $3.67 billion upon completion.

Vietcombank plans to issue over 1 billion shares from its capital reserve fund to increase charter capital by $427 million, raising total charter capital from $3.34 billion to around $3.77 billion.

At its AGM on April 18, MB Bank outlined a plan to increase charter capital from $3.22 billion to a maximum of $4.11 billion, executed through three components. If completed, MB will join the small group of banks with charter capital exceeding $4 billion.

Responding to VIR on whether MB's large-scale capital increase is driven by growth needs or stricter regulatory requirements from the State Bank of Vietnam, CEO Pham Nhu Anh said that while the Law on Credit Institutions sets capital adequacy requirements, MB is targeting Basel III compliance in the coming years, aiming for a capital adequacy ratio (CAR) of around 11 per cent.