On September 5, Caixin learned (Reporter: Zou Juntao) that on the afternoon of September 5, Bank of Guizhou held a mid-year performance briefing for 2024. At the meeting, the management of Bank of Guizhou had intensive interactions with investors, discussing topics such as whether the change in provision coverage ratio was to adjust profits, how to control the widening of the net interest margin reduction, and whether to consider increasing the dividend ratio and frequency.

It is worth noting that as of the first half of the year, the non-performing loan ratio of Bank of Guizhou was 1.62%, up by 0.03 percentage points from the beginning of the year, and up by 0.15 percentage points year-on-year. During the meeting, some investors asked why the company's non-performing loan ratio had risen again and when the turning point would come, but Bank of Guizhou did not respond to this.

The mid-year report of Bank of Guizhou shows that as of the end of the reporting period, the non-performing loan ratio increased by 0.03 percentage points from the beginning of the year, mainly affected by factors such as the slowing down of macroeconomic growth, inadequate effective market demand, slow recovery in some industries, and deterioration in the risk quality of some enterprises.

Investors questioned the change in the provision coverage ratio as a means to adjust profits.

The mid-year report shows that Bank of Guizhou achieved a total operating income of 7.406 billion yuan in the first half of this year, a decrease of 4% year-on-year, and realized a net profit attributable to the parent company of 2.666 billion yuan, a decrease of 7.08% year-on-year. In addition, as of the end of June this year, Bank of Guizhou's provision coverage ratio was 257.81%, an increase of 13.31 percentage points from the beginning of the year.

At the performance briefing, some investors expressed dissatisfaction, stating, "Is the provision coverage ratio of 257.8% just what you intend to provide in order to adjust profits?"

Bank of Guizhou's President Sheng Jun indicated, "Our bank strictly follows the requirements of the "Corporate Accounting Standards" and the "Implementation Measures for Commercial Banks' Expected Credit Loss Model", and uses the expected credit loss model to make provision for impairment of capital, which has been verified through internal and external audits. Our bank strictly follows the management procedures, regularly updates the measurement parameters and makes provision for asset impairment, which complies with regulatory requirements."

According to the data from East Money Information Choice, in the first half of this year, among the 42 listed banks in Group A, the banks with the highest increase in provision coverage ratio were Jiangsu Jiangyin Rural Commercial Bank, Ruifeng Bank, Bank of Zhengzhou, Bank of Chongqing, and Bank of Guiyang. The increase in ratio was all above 10 percentage points compared to the beginning of the year.

It is understood that according to the Provisional Risk Rating System for Joint-Stock Commercial Banks, the provision coverage ratio is the ratio of actual provision for loan losses to non-performing loans. The optimal state of this ratio is 100%. The provision coverage ratio is an important indicator of banks, which examines whether the bank's finances are stable and whether the risk is controllable. The China Banking and Insurance Regulatory Commission disclosed that as of the end of the second quarter of this year, the provision coverage ratio of commercial banks in China was 209.32%.

How to control the cost of liabilities after the widening decline in net interest margin.

In recent years, the overall net interest margin of the banking industry has been under pressure, and Bank of Guiyang is also facing the continuous decline of net interest margin. As of the end of June this year, the bank's net interest margin was 1.81%, a decrease of 30 basis points compared to the beginning of the year, second only to Ping An Bank and Jiangsu Zhangjiagang Rural Commercial Bank among listed banks. Bank of Guiyang believes in its mid-year report that the narrowing of net interest margin is due to the impact of interest-bearing entities receiving benefits, adjustment of asset structure, continuous decline of market interest rates, and deepened trend of deposit termization.

The interim report shows that the widening decline in net interest margin of Bank of Guiyang is related to the greater interest payment pressure on its liabilities. The data shows that as of the end of June this year, the average annual interest rate of Bank of Guiyang's total interest-bearing liabilities was 2.55%, a decrease of 2 basis points compared to the beginning of the year. Among them, the interest rate on personal fixed-term deposits is 3.4%, which is at a relatively high level in the industry. At the same time, the average annual interest rate of total interest-earning assets is 4.3%, a decrease of 15 basis points compared to the beginning of the year.

At the performance briefing, investors were concerned about when the net interest margin of Bank of Guiyang is expected to stabilize and how to control the cost of liabilities in the future.

Li Yun, Chief Financial Officer of Bank of Guiyang, said that the bank's net interest margin has narrowed compared to the previous year, which is consistent with the industry trend. Under the trend of continuous decline in asset yield, our bank will continue to adhere to the development concept of "quantity-price coordination", increase the inflow of low-cost funds and fund precipitation, continuously optimize the deposit term structure. At the same time, enhance the ability of financial market trading and active liability management, improve the ability to time the marketization of funds, control the cost of interbank liabilities, and gradually restore the net interest margin.

Investors are particularly concerned about the frequency and proportion of dividends.

In this performance briefing, the company's dividend situation has received special attention. Many investors asked the management of Bank of Guiyang whether there will be mid-term dividends and whether the dividend ratio will be increased.

Regarding the question of whether there will be mid-term dividends, Zhang Zhenghai, the chairman of Bank of Guiyang, stated that the bank will maintain a consistent and stable cash dividend ratio and frequency in accordance with regulatory requirements and guidance, taking into account the demands of investors and the bank's operational development needs.

It is understood that before this, many listed banks, including the five state-owned banks, have implemented the "nine new rules" requirement of "dividends multiple times a year" and have already released mid-term dividend plans. According to the announcement, Bank of Guiyang has not yet disclosed any information about mid-term dividends.

As for whether the dividend ratio will be increased in the future, Zhang Zhenghai said that the company attaches great importance to providing reasonable investment returns to investors. Since its listing, the company has cumulatively distributed 7.624 billion yuan in cash dividends. The company will continue to implement a sustainable and reasonable dividend distribution policy while ensuring the sustainable development of the entire bank, in accordance with regulatory requirements and guidance, and comprehensively considering the demands of investors. At the same time, the company will create sustainable value returns for investors through continuous improvement of its operation and management.

According to the profit distribution plan of Bank of Guiyang for the year 2023, the company distributed a total of approximately 1.06 billion yuan in cash dividends to ordinary shareholders (including tax), accounting for 20.02% of the net profit attributable to ordinary shareholders of the parent company, which was 5.297 billion yuan.