Financial Services Association, May 22 (Reporter Liang Kezhi) Today, Sunong Bank announced the shareholders' meeting resolution, showing that the approval ratio for its “2023 Profit Distribution Plan” was 95.3565%, with more than 17.97 million votes against it, accounting for 4.6435%. Of these, shareholders holding less than 1% of the shares opposed it by 11.26%.

According to the announcement, Sunong Bank's 2023 distribution plan will distribute a cash dividend of RMB 1.8 (tax included) for every 10 shares. The 2022 distribution plan is to distribute a cash dividend of RMB 1.7 (tax included) for every 10 shares.

Looking at the dividend rate, Sunon Bank was only 18.62% last year, down from 20.41% the previous year, the second-lowest level since the bank went public; however, judging from the total dividends, Sunong Bank's current dividend will reach 325 million yuan, which is also the highest value since the bank went public.

On May 22, senior investment banker Wang Jiyue told the Financial Association that there have always been situations where small and medium shareholders disagree with cash dividends, and that many small to medium investors invest not for dividends, but for price differences. Shareholding time is short, and dividends are taxed, so they are more inclined to support repurchases, which can also raise stock prices.

Wang Jiyue believes that on the surface, buybacks are more beneficial to minority shareholders than dividends, but if the shareholding period is long enough, the balance of benefits and risks brought by high dividends is better.

A CFA reporter checked the recent announcement of the shareholders' meeting and found that there have been many similar cases of small and medium shareholders opposing the dividend plan this year. For example, the “Zijin Agricultural Commercial Bank 2024-2026 Shareholder Dividend Return Plan” had an opposition ratio of 4.4%; in Huaxia Bank's cash dividend vote, shareholders holding 1% or less and a market capitalization of 500,000 or more had an opposition ratio of 3.04%.

On May 22, Yin Zhongyu, assistant to the president of the Federal Reserve Securities and head of the M&A business department, told the Financial Federation that the concept of regulations encouraging banks to increase dividends, stabilize development expectations, and guide investors to firmly invest in the long term is a positive promotion. However, given the differences in the structure of different institutions and shareholders, banks and shareholders will definitely have different opinions on the method and ratio of dividends. Shareholders' different investment values exist objectively, and we should view and accommodate them from multiple perspectives.

There was a sharp increase in votes against Sunong Bank's cash dividend vote

Comparing the proposals relating to profit dividends at Sunong Bank's shareholders' meetings in the past two years, it can be seen that there was a significant increase in negative votes at the 2023 shareholders' meeting.

For example, in the profit distribution plan, among shareholders holding less than 5%, the opposition ratio in 2023 was 6.90%, which is far higher than the opposition ratio of 0.01% in 2022.

According to the announcement, Sunong Bank's 2022 distribution plan is to distribute a cash dividend of RMB 1.7 (tax included) for every 10 shares. The 2023 distribution plan will pay a cash dividend of RMB 1.8 (tax included) for every 10 shares.

Meanwhile, the resolution of the 2022 Shareholders' Meeting shows that in the cash dividend vote, shareholders holding less than 1% of shares opposed 0.05%. All of them were voted by shareholders with a market capitalization of 500,000 or less, and the number of votes was 46561. According to the 2023 resolution, the opposition ratio of shareholders holding less than 1% of the shares was 11.26%, of which shareholders with a market capitalization of 500,000 or more objected to 17.63%, and the number of votes was 17.97 million.

A Financial Services Association reporter noticed that among shareholders' votes below 5%, the Sunong Bank's “2023-2025 Shareholder Return Plan” bill considered by the 2022 shareholders' meeting had the lowest pass rate of 98.05%; the rest of the bills were above 99.9%.

On May 22, the head of the research department of a brokerage firm in Shanghai told the Financial Federation that small and medium shareholders of banks once opposed large dividends on the grounds that the bank itself consumes a lot of capital. At the same time, interest spreads and profits are shrinking, and banks are unable to supplement capital through equity financing.

The source suggested that listed companies' opinions on small and medium shareholders should also be taken into account, and that the balance of interests of various parties should be taken into account when deciding on dividend proposals.

In the “2023-2025 Capital Management Plan” released in November 2023, Sunong Bank stated that the Bank has set a core capital adequacy ratio target of 9%, Tier 1 capital adequacy ratio of 10%, and capital adequacy ratio of 12.5% for the next three years.

At the same time, Sunong Bank stated that the Bank's profit distribution policy must meet the relevant requirements of banking supervisory authorities on bank dividend distribution. At the same time, the Bank will comprehensively consider factors such as the Bank's actual business situation, future business development ability, capital replenishment capacity, shareholders' will, and reasonable return to shareholders to establish a sustainable, stable and scientific return plan and mechanism for investors.

Banks increase dividends, and long-term investment concepts are gradually becoming mainstream

According to data from the Minsheng Securities Research Report, the cash dividend ratio of listed banks continued to stabilize around 30% from 2019 to 2022, and the cash dividend ratio in the banking sector was 30.9% in 2023.

The person from the Shanghai brokerage agency mentioned above believes that due to fundamentalism, it is understandable that small and medium shareholders focus on short-term price differences and do not pay attention to long-term returns, but judging from regulatory attitudes and market trends, it is still through indirect measures to promote and guide banks' dividends to stabilize expectations, and investors stabilize stock prices over the long term.

A Financial Services Association reporter noticed that in addition to the six major banks, the dividend ratio of stock banks is rising this year. Industrial Bank has the largest dividend payment amount, with a proposed dividend amount of 21,605 billion yuan; the other 3 companies that have more than 10 billion yuan in dividends are China CITIC Bank, Ping An Bank, and Everbright Bank. The proposed dividend amounts are 17.432 billion yuan, 13.953 billion yuan, and 10.222 billion yuan, respectively.

At Ping An Bank's 2023 annual results conference, Ping An Bank Governor Ji Guangheng said, “In the past, profits were mainly used to supplement capital, so the ratio was not high. In 2023, Ping An Bank's capital adequacy ratio improved, so the dividend ratio was raised to 30%, and capital efficiency and return will be actively optimized in the future.”

At this year's results conference, Societe Generale Bank Governor Chen Xinjian also said that a stable dividend rate depends on revenue and profit. Industrial Bank hopes to increase year by year to ensure that the dividend rate remains at a relatively high level.

Earlier, the “Certain Opinions on Strengthening Supervision and Risk Prevention and Promoting High-Quality Development of the Capital Market” (hereinafter referred to as the new “National Nine Rules”) issued by the State Council proposed strengthening the supervision of cash dividends for listed companies. Among them, it was mentioned that dividends, pre-dividends, and pre-Spring Festival dividends should be promoted more than once a year.

According to incomplete statistics, at least 13 banks have now revealed their intention to pay dividends in the medium term, including 5 major state-owned banks to establish diplomatic relations between workers and farmers, as well as Bank of Lanzhou, Bank of Shanghai, Bank of Jiangsu, Shanghai-Agricultural Commercial Bank, Zijin Bank, Bank of Suzhou, Bank of Nanjing, and Zheshang Bank.