10 years of equitization

huong Phuong

A meeting on the re listing of BIDV stock on the stock exchange

Equitization is an important step that helps BIDV rise to become the leading bank in the industry.

SPECIAL IPO

On 28 December 2011, under Prime Minister's Decision No. 2124/QDTTg, BIDV implemented equitization through initial public offering (IPO) at Hanoi Stock exchange. The equitization has contributed to realizing the goal of further innovating business governance following standards for a modern commercial bank.

The IPO was a great success with all 85 million shares or 3 percent of the bank's charter capital sold out at a price beyond expectation. The above deal was voted as one of the 10 outstanding events of Vietnam stock market in 2011. The bank’s IPO left a footprint in Vietnam's stock market as it was implemented in the fastest time in just 21 working days after the Prime Minister approved the equitization plan. The IPO saw the largest number of participating investors, with 16,238 investors registering to bid for shares. BIDV was also the first enterprise to apply State audit to audit the corporate value before equitization. After the IPO, BIDV became the enterprise with the highest market capitalization.

The transformation into a joint stock commercial bank marks an important milestone in BIDV’s development history, opening up opportunities to improve financial capacity, enhance transparency as well as strengthen brand in the market.

SHARE LISTING

2 years after the IPO, BIDV made fundamental developments. As of 31 December 2013, the bank’s total assets reached VND550 trillion (USD24.2 billion), with growth rate of capital mobilization and loans reaching over 16 percent each, and profit before tax reaching VND5,233 billion (USD230 million), an increase of nearly 21 percent compared to 2012. ROA and ROe ratios were 0.73 percent and 12.7 percent, respectively and dividend payout ratio was 8.5 percent.

In 2013, BIDV completed the issuance of additional 510,032,102 shares worth of VND5,100 billion (USD224 million) to current shareholders and issued long-term bonds worth of VND3,150 billion (USD138.5 million) that met the conditions to be calculated in the tier-2 capital. BIDV successfully implemented many cooperation and investment activities, partnering with MetLife Inc. - the largest life insurance company in the United States, and with Sumitomo Mitsui Trust Bank - the No. 1 trust and asset management bank in Japan, etc.

On 24 January 2014, in Ho Chi Minh City, 2,811,202,644 shares of BIDV (ticker: BID) were officially listed on Ho Chi Minh City Stock exchange (HOSe). BIDV was the 6th joint stock commercial bank and the 354th enterprises listed on HOSe.

With the offering price of VND18,700 per share, BIDV’s capitalization accounted for more than 5 percent of the total market’s capitalization. BIDV's share listing has had positive effects on the market in general and the VN-Index in particular, helping attract more foreign investors’ participation in the Vietnamese stock market. For BIDV, the listing on the stock market is an important step

following the successful IPO, ensuring the interests of shareholders and enhances the share liquidity.

STRONG GROWTH

After 10 years of transforming into a joint stock commercial bank, despite the unfavorable domestic and international economic situations, BIDV continued to maintain stable operations and strong development.

In the 2012 – 2021 period, BIDV's profit before tax has grown at the rate of 12.4 percent per year on average. For 2021 alone, the bank’s consolidated pre-tax profit reached more than VND13,602 billion (USD598.4 million), up 50 percent compared to the previous year.

After 10 years of equitization, BIDV's total assets reached over VND1.76 quadrillion (USD77.4 billion), 4.3 times higher than 2011, ranking first in the Vietnamese banking system. On average, the bank’s total assets grew at a rate of 15.8 percent per year, much higher than the overall growth rate of the banking industry.

BIDV’s own capital has been strongly supplemented over the past 10 years, reaching VND86,367 billion (USD38 billion) in 2021 from 24,390 billion at the end of 2011 or 3.5 times increase. Notably, BIDV has successfully increased its charter capital to more than VND50,585 billion (USD2.3 billion) in 2021 – the highest in the banking industry and 3.9 times higher than the level before the IPO.

BIDV’s asset quality has improved over the years. At the end of 2021, BIDV's non-performing loan ratio under the State Bank’s Circular 11/2021 was 0.81 percent, down 0.73 percent from 2020. BIDV’s bad debt coverage ratio was 235 percent - the highest level in the bank’s history.

The equitization not only helps increase financial strength for BIDV but also lays a solid foundation for the bank to cement its position and reputation in the financial market.

BIDV's shares set its highest price at VND49,000 (USD2.2) per share on 25 January 2022 (after price adjustment). Compared to the closing price on the first trading day on the exchange, the market price of BIDV's shares has increased by nearly 4.3 times (or an increase of 20.2 percent per year), much higher than the general increase of the VN-Index (nearly 2.7 times). BIDV's shares have always been in the market-leading VN30 Index basket. Currently, BIDV's market capitalization is more than VND242,300 billion (USD10.7 billion), ranking second in the banking industry and fourth in the entire market.

In terms of international cooperation, equitization is a “strategic move” that helps BIDV to be more transparent to receive resources and business experience from foreign investors. On 11 November 2019, BIDV and Hana Bank officially signed a strategic cooperation agreement. Hana Bank has become a foreign strategic shareholder of BIDV, owning 15 percent of BIDV's charter capital. This was the biggest M&A deal with a strategic investor in Vietnam's banking industry, marking another important milestone in the bank’s development and international integration. The deal was also honoured as Vietnam's outstanding investment and M&A deal in 2019 – 2020 at an M&A Forum 2020 held in Ho Chi Minh City.

BIDV and Hana Bank signed a strategic cooperation agreement in 2019 in Hanoi