VPBank's headquarter VPBank Tower in Hà Nội. The private equity lender wants to buy back 50 million treasury shares for VNĐ20,000-24,000 per share. — Photo vietnamfinance.vn

HÀ NỘI — The Vietnam Prosperity Joint Stock Commercial Bank (VPBank) in the fourth quarter will buy back 50 million shares, equal to 2 per cent of its total outstanding shares.

The buyback will turn 50 million common shares to treasury shares. Buying price is estimated between VNĐ20,000 (US$0.86) and VNĐ24,000 per share.

The bank will spend its undistributed net profit buying those treasury shares. Undistributed net profit of 2018 financial year is now VNĐ6.25 trillion ($268.75 million).

According to VPBank, the share buyback aims to boost the bank’s share price and increase the earnings-per-share ratio for shareholders.

VPBank’s shares are listed on the Ho Chi Minh Stock Exchange as VPB. They gained 1 per cent to trade at VNĐ20,450 per share on Friday.

The bank debuted on HoSE on August 14, 2017 at VNĐ23,500. Its shares touched the highest level of VNĐ42,000 per share on April 2, 2018.

VPBank’s management board told analysts last week that the buyback will not pressurise its capital adequacy ratio, which was 11.2 per cent in June-end – much higher than Basel II par of 8 per cent. The bank’s owner equity capital as of June 2019 was VNĐ38.2 trillion.

The buyback will not also affect the bank’s capital which aims to expand business activities and the bank still has different options to raise capital, the management board said.

In the first seven months of 2019, VPBank earned VNĐ5.3 trillion worth of pre-tax profit, fulfilling 56 per cent of its full-year target. The bank is confident it will beat this year’s target.

VPBank has a 7 per cent room for foreign investors to jump in. At the bank’s annual shareholder meeting in late April 2019, shareholders approved the bank plan to issue private shares for foreign investors but it has not been executed yet because the bank shares are declining and the market trading is not ideal.

In July, VPBank raised $300 million from listing international bond notes on the Singapore Exchange, marking the biggest bond issuance made by a Vietnamese firm. — VNS