VietNamNet Bridge - Many banks have announced they will not pay 2014’s dividends to shareholders, even though they have declared trillions of dong in profit. This has raised doubts about the status of the banks’ health.  

Despite fierce opposition from small shareholders, Techcombank’s 2015 shareholders’ meeting still approved a plan on not paying 2014 dividends, but using all the profits for re-investments.

Techcombank’s president Ho Hung Anh said this was not the first time the bank’s board of directors faced strong opposition from shareholders. However, it is steadfast with its policy.

Anh also said that Techcombank does not intend to pay dividends in the next 3-5 years as well.

The statement implies that long-term investors would not make money from Techcombank shares for about 10 years.

Shareholders had every reason to cause such a backlash toward Techcombank’s board of directors. The bank has repeatedly reported high growth rates, high profits and good indexes, but it still does not intend to pay dividends.

In 2014, Techcombank reported the pretax profit of VND1.4 trillion, a sharp increase of 61 percent over 2014.

Meanwhile, it has set a very ambitious business plan for 2015 with the expected profit up by 40 percent. The pay for the board of directors and board of supervisors is also expected to increase sharply, but the bank once again plans not to pay dividends.

Nam A Bank also reported high profits over the last years, but only paid dividends at “moderate level”. The dividend was 4 percent in 2014, which was even lower than the bank deposit interest rate.

However, the dividend which is “modest” in shareholders’ eyes, is the highest or second highest level among the commercial banks in HCM City.

Maritime Bank is one of the banks saying ‘no’ when asked about the dividend payment for 2014. It has not paid dividends for the last two years and does not intend to pay dividends for 2015 as well, though it had profits of VND400 billion in 2014 and VND164 billion in 2013.

Tien Phong Bank’s shareholders have not received dividends in many years. Meanwhile, VietBank, VPBank and BVB have not mentioned the dividend payment in the last several years.

Analysts commented that by repeatedly refusing to pay dividends, banks have “neglected” small shareholders’ benefits. Some investors have even raised doubts about the banks’ health.

It is understandable why some banks, including Southern Bank, OceanBank and PG Bank, which are undergoing the compulsory restructure process, decided not to pay dividends. However, it is unclear why profitable banks also do not want to pay dividends.

An analyst commented that the movement of banks, both profitable and weak, saying ‘no’ to dividend payments shows that “something is wrong”.

Tran Thuy