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Submitting to the National Assembly for consideration to increase VND 17,100 billion of charter capital for Agribank

On the morning of May 13, the National Assembly Standing Committee continued its 23rd meeting to give opinions on the additional charter capital for the Bank for Agriculture and Rural Development (Agribank) by 17,100 billion VND.
Presenting the Government's report, State Bank Deputy Governor Doan Thai Son said that the additional capital for Agribank will be from the 2023 central budget expenditure estimate approved by the National Assembly, over VND 6,753 billion. The remaining nearly 10,347 billion VND will be allocated from the State budget and transferred in 2024.
This additional proposed capital level of 17,100 billion dongs corresponds to the remaining interest after setting aside the annual funds for 2021-2023 that Agribank pays to the State budget. According to the Deputy Governor, in the past five years, the growth rate of Agribank's charter capital was lower than that of total assets, causing the minimum safety ratio to be reduced, not reaching the prescribed level.
Currently, the charter capital of Agribank by the end of 2022 is 34,446 billion VND, the lowest among state-owned commercial banks, and there is no difference, lower than other commercial banks such as Techcombank (35,172 billion), MB (45,339 billion dongs), VPBank (67,434 billion dongs).

Also read: ​Agribank and FWD Vietnam announce bancassurance partnership​​​

Therefore, adding VND 17,100 billion will help Agribank ensure the minimum capital adequacy ratio (8%), expand credit, and meet the capital needs of the agricultural and rural sectors.
Mr. Son warned that if Agribank is not allowed to increase capital, it will not ensure its crucial role in guiding the banking market, especially with banks operating mainly in the fields of agriculture and rural areas.

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Chairman of Economic Committee Vu Hong Thanh

Chairman of the Economic Committee Vu Hong Thanh requested the Government to report and clarify the proposal's feasibility because the economy and business operations face many difficulties. This will make budget revenue, and the profit of Agribank may be different than expected.In addition, the Government needs to determine the specific source of the remaining budget allocation (10,347 billion VND), the plan to handle if 2023 Agribank does not meet the budget payment as expected, as well as the ability to meet the requirements of capital adequacy ratios of 8%.

Read more: ​Agribank reported a profit of nearly 13,000 billion​​​

Previously, Agribank was approved by the National Assembly to supplement charter capital in 2020 with an amount equal to the maximum after-tax profit paid to the state budget in the year of 3,500 billion VND.
Need to explain more clearly the plan to increase charter capital
Concluding this content, Vice Chairman of the National Assembly Nguyen Duc Hai said that the National Assembly Standing Committee agreed to add to the 2023 law and ordinance program, submitting to the National Assembly to supplement charter capital for Agribank at the 5th meeting.
Vice Chairman of the National Assembly Nguyen Duc Hai. Photo: Pham Thang

However, the National Assembly Standing Committee suggested that the Government soon complete the dossier for the National Assembly's agencies to verify. In particular, the Government needs to explain more clearly the plan to increase charter capital as required by Resolution 43, the feasibility of additional capital, additional capital sources, an assessment of the impact on the State budget, and the profit after tax 2021- first quarter of 2023 has been paid into the budget.The Vice Chairman of the National Assembly assigned the Economic Committee to examine the contents of the Government's report more closely. The contents submitted to the National Assembly for a decision should clearly state the responsibilities of the Government and Agribank.
At the same time, the Government carefully evaluates the impact on the budget balance, revenue sources, and spending tasks to develop a 2024 estimate and submit it to the National Assembly to allocate the remaining capital compared to the total capital decided by the National Assembly.
In a share with VnExpress newspaper, Agribank Chairman Pham Duc An said that "the bank is very thirsty for capital," asking the competent authorities to consider this to have more resources. If one more beat is delayed, the bank will have difficulty ensuring the capital adequacy ratio."
According to this newspaper, Ms. Ha Thi My Dung, Deputy State Auditor General, agreed with the additional capital increase for Agribank but noted that the State Bank of Vietnam should review the financial situation of Agribank to ensure the increase in the capital following the law. "The State Bank has learned from previous times of supplementing capital for state-owned banks to clarify additional sources and effective capital allocation plans," Ms. Dung said.
In 2022, Agribank reported a pre-tax profit of more than VND 22,000 billion, among the system's top 5 most profitable banks. The bank's credit balance by the end of last year grew by 9.8% compared to the beginning of the year, while capital mobilization increased by just over 5%.

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