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Vietinbank, the country’s third largest bank by assets, has been licenced to issue 392 million shares to raise its chartered capital by 30 per cent, from VND11,252 billion ($592 million) to VND15,172 billion ($798 million) for the first phase in 2010.
The shares will be offered at VND10,000 including 315.1 million shares offered for existing shareholders and listed on the Ho Chi Minh Stock Exchange (HoSE) after the issuance’s completion, with a 28 per cent rate.
It means shareholders with 100 current shares will have a right to buy 28 shares and the remaining 76.5 million shares will be paid as a dividend to existing shareholders at the rate of 6.83 per cent.
In the second phase, the bank will sell a 10 per cent stake to foreign partners, International Finance Company (IFC) and Bank of Nova Scotia of Canada. The state will hold a 90 per cent stake in the bank.
Upon the two issuance phases, Vietinbank’s earnings per share (EPS) would drop from VND2,500 in 2009 to about VND2,000 in 2010, said Hoang Thi Thanh Thuy, chief analyst of Tan Viet Securities Incorporation (TVSI).
Vietinbank’s rivals Vietcombank and ACB had EPS in 2009 at VND3,500 and VND3,200, respectively.
Vietinbank, trading code CTG, ranks sixth among the largest market cap firms on the HoSE. The bank’s total assets account for over 20 per cent of the market share of the Vietnamese banking system.
An analyst of another securities company said the real dividend for shareholders in cash was higher than the rate of 6.83 per cent, despite the share dilution.
“Even when Vietinbank’s shares are diluted, investors will be benefit because CTG’s price sold in this case is half of the market price,” he said.
Thuy of TVSI noted that if Vietinbank reached its profit target in 2010, its EPS after dilution would still guarantee a share dividend of 14 per cent as planned.
Vietinbank’s statistics show its pre-tax profit in the first six months of the year were $114.6 million, up 30 per cent year-on-year and equivalent to 55 per cent of the whole-year plan.
In 2010, Vietinbank targeted a pre-tax profit of VND4 trillion ($211 million) and total assets of $15.8 billion, a figure that would represent 25 per cent growth.
A member of Vietinbank’s board of directors claimed with the satisfactory business results in the first six months, its year plan was expected to reach with the share dividend of 20 per cent.
“Mobilised capital will be used to strengthen investment in its credit activities, expand its banking network in the country and overseas and upgrading the infrastructure facilities, technologies and developing new services,” he said.
Thuy said in general, Vietnamese banks had a high policy risk. “Compared to other stocks, CTG has quite good basic indexes. Therefore, in case of the positive economic situation and the brighter stock market, CTG will be a good choice for investors to consider investment.”
Meanwhile, an EViet Securities Joint Stock Company analyst argued that Vietnamese commercial banks’ prospects for this year would be not bright, due to a tight credit policy, few cash resources and oversupply of bank shares.
“Despite many favours for shareholders, CTG is likely not to exclude this situation of commercial banks,” he said.