On September 25th, UBS Group released a report stating that the China Banking and Insurance Regulatory Commission announced the injection of common equity Tier 1 capital into 6 state-owned banks. Generally, the attention is focused on whether the capital injection will be done through private placements or issuance of subscription rights. The capital injection is based on the financing needs of each bank, with the difficulty lying in the fact that the mainland China banking stocks currently have a price-to-book ratio below the minimum threshold of 1. The bank considers the implications of the actions, positively by allowing the relevant China mainland banking to maintain the payout ratio, or to be able to maintain a stable dividend per share even when profits decline moderately. However, this also means dilution of dividend per share and dividend yield, which is currently the most important valuation basis for China mainland banking stocks. The bank expects Postal Savings Bank of China, Bank of Communications, and Agricultural Bank of China to be the first to receive capital injections, and the injection scale is relatively large, based on their limited buffer of common equity Tier 1 capital ratio. The bank estimates that for every 1 percentage point increase in common equity Tier 1 capital injected, Postal Savings Bank of China, Bank of Communications, and Agricultural Bank of China would need to inject 86 billion, 90 billion, and 221 billion yuan respectively, with H shares dividends decreasing by 0.6 percentage points. Large banks are expected to distribute interim dividends in January next year, exhibiting a defensive nature in the current macro environment, with China Construction Bank being the top choice due to lower dividend and dilution risks.