Many banks fail to pay 2014 dividends

According to a report by the central bank’s HCMC branch, seven of 12 banks in the city have not paid 2014 dividends to shareholders, the highest figure in years.

Eximbank, HDBank, ABBank, SCB and Southern Bank may not pay dividends due to their lower-than-expected earnings and credit risk provisions last year.

Meanwhile, LienVietPostBank has reduced its dividend to 6% from 10% as earlier projected while that at VIB has dropped from 11% to 9%.

This year, most banks have had to consult with the central bank over dividend payments. According to the report, the agency will look into debt classification and risk provisions to evaluate banks’ profit distribution.

Regarding the 9% dividend payment limit, a leader of the central bank has rejected rumors about this cap, saying dividends are decided by banks’ performance.

This is also the first year the central bank has closely supervised dividend payments by banks. The central bank might not have intervened deeply in bank operations, but high dividends at a time of hardship may affect the banking sector restructuring process.

Therefore, the central bank currently has to regulate dividend payment at each bank, the official said.

A banker forecast that lenders could not get out of the woods this year. After the validity of Circular 09/2014/NHNN ended early this month, many debts in group 3 (substandard) have been transferred into group 5, potentially irrecoverable.

In addition, share and bond investments have been tightened, so banks have to struggle as credit becomes their only lifeline.

Experts predicted mergers and acquisitions (M&A) and falling profits would take center stage at AGMs this year.