PG Bank had to set aside a provision of VND383 billion ($17 million) in 2017 so its profit was not enough to pay dividends. Will the merger with HDBank improve the business activities of PG Bank?
According to PG Bank’s report on its general shareholders’ meeting, the total assets of the bank in 2017 were nearly VND29.3 trillion ($1.3 billion), up 18 per cent on-year, while total deposits were approximately VND25.3 trillion ($1.12 billion), up 20 per cent, and the outstanding balance of the entire bank was VND21.42 trillion ($0.95 billion), up 22 per cent.
In 2017, PG Bank gained VND80 billion ($3.5 million) in pre-tax profit, equivalent to 54 per cent of the plan set forth. At the annual general shareholders’ meeting yesterday, PG Bank’s chairman Bui Ngoc Bao said that the reason for the low profit was unsatisfactory deposits and lending, and the increase of provisions.
The total bad debts of PG Bank were VND691 billion ($30.44), increasing by VND258 billion ($11.37 million) against 2016, equalling 3.23 per cent compared to the 2.47 per cent of 2016.
The report shows that the bank reached most of all business targets in 2017, but profit was little as provisions were set at VND383 billion ($17 million). PG Bank intends not to pay dividend in 2017.
In 2018, PG Bank set the target of nearly VND30 trillion ($1.3 billion) in total deposits, up 19 per cent on-year, and VND24 trillion ($1.06 billion) in outstanding lending, up 12 per cent.
In the end of 2018, the total assets of the bank are expected to rise by 17 per cent to VND34.2 trillion ($1.5 billion) throughout the year. Pre-tax profit is expected to hit VND183 billion ($8.6 million), a 2.3-fold increase against 2017’s performance, because the bank intends to set aside provisions of VND33 billion ($1.45 million), while it set aside VND460 billion ($20.26 million) in 2017.
PG Bank and HDBank are collaborating to complete the merger in this August. PG Bank maintains its leadership until the merger is finalised in the next several months.
“The final target of the leaders is to merge and develop PG Bank into a large-scale bank and bring benefits to all shareholders. The merged entity will keep all jobs, employees, as well as develop the bank,” Bao stated at the annual general shareholders’ meeting yesterday.
As PG Bank has been in the red for a while now, it remains questionable whether HDBank could improve its situation. Also, should shareholders expect dividend at the next AGM?
Earlier, on April 19, Vietnam National Petroleum Group (Petrolimex), the parent company of PG Bank, signed a strategic co-operation agreement with HDBank. Their plan outlined the estimated swap ratio of PG Bank and HDBank shares at 1:0.621, meaning one share of PG Bank will be converted into 0.621 shares of HDBank.
Additionally, HDBank plans to pay a bonus equivalent to 20 per cent of the total shares for shareholders. If the merger plan is approved, Petrolimex will also get an additional 20 per cent of the bonus shares based on the total number of swapped shares after the merger. Moreover, the merger will also create a surplus estimated at VND5 trillion ($220.3 million), which will benefit all shareholders, including Petrolimex.
HDBank holds great experience in the management and administration of mergers and acquisitions activities. By this merger, the charter capital of the two banks is estimated at VND15.345 trillion ($676 million).
PG Bank and HDBank expect to become an outstanding financial and credit organisation, and its network of individual customers and small- and medium-sized enterprises will expand drastically.
Source: VIR
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