①Investors are concerned about the self-discipline investigation results of the national bond trading, with no response from the management. ②President Bao Jian explains the reasons for the decline in fair value change income in the third quarter. ③Secretary to the Board Tang Zhifeng responds to investors' demands for increased dividend payouts.
On the afternoon of November 6, Jiangsu Changshu Rural Commercial Bank held the third quarter performance briefing for 2024. At the meeting, the management of Changshu Bank responded to various investor concerns such as whether to increase dividends and the reasons for the decline in fair value gains in the third quarter.
It is worth noting that investors questioned whether the recent self-discipline investigation launched by the China Foreign Exchange Trading System & National Interbank Funding Center (CFETS) regarding Changshu Bank has yielded results. However, by the end of the performance briefing, the management of Changshu Bank did not provide a response.
The self-discipline investigation results are still pending.
On August 7, the CFETS initiated a self-discipline investigation into four rural commercial banks in Jiangsu. The investigation was based on suspicions of market price manipulation and benefit transfers in the bond secondary market by Changshu Rural Commercial Bank, Jiangsu Jiangnan Rural Commercial Bank Co., Ltd., Jiangsu Kunshan Rural Commercial Bank Co., Ltd., and Jiangsu Suzhou Rural Commercial Bank. Pursuant to the CFETS' Market Self-Discipline Rules for the Interbank Bond Market, the investigation was launched against these four institutions.
At that time, a representative from Changshu Bank's investment department responded to the media stating, 'CFETS is a self-regulatory organization with the authority to conduct self-discipline inspections on its member units. In accordance with the association's requirements, the company is providing relevant transaction details and data for investigation. We are currently conducting a thorough check.' As for the potential impact on Changshu Bank's operations, the representative mentioned, 'The assessment will need to be made after the association's inspection, and it is currently not very clear.'
Furthermore, regarding the inquiry into whether the investigation will affect future transactions in Changshu Bank's government bond secondary market. At that time, a staff member from Changshu Bank told the media, 'Currently, we are in the inspection phase and may temporarily suspend buying and selling government bonds. We will need to wait for the investigation results and will actively cooperate with the self-discipline inspection work conducted by the CFETS.'
Based on publicly available information, Changshu Bank has not yet disclosed the results of the investigation.
Caixin reporters noticed that at the same time when the Securities Association initiated a self-discipline investigation, Jiangsu Suzhou Rural Commercial Bank, also mentioned to the media that the bank is currently conducting an internal self-inspection, and if there is any progress in the future, announcements will be made. As of now, Jiangsu Suzhou Rural Commercial Bank has not yet announced any relevant investigation results.
The investment growth rate in the third quarter has slowed down from its high level.
In the first half of this year, jiangsu changshu rural commercial bank's investment income growth was strong, and the proportion of operating income increased significantly. Analyst Wang Hongxing from Donghai Securities believes that there are mainly two reasons for this: on one hand, the allocation of trading financial assets is significantly stronger than the same period last year; on the other hand, the company has better grasped opportunities in the bond market to achieve certain excess returns.
The third quarter report shows that jiangsu changshu rural commercial bank's investment income has declined. Wang Hongxing pointed out that jiangsu changshu rural commercial bank's Q3 investment income significantly declined from its peak, with investment income + fair value change loss of 0.222 billion yuan (compared to 0.498 billion yuan in the same period last year), mainly due to two reasons: on one hand, the bond market has weakened significantly since the "9.24" policy, and on the other hand, the company may be reducing investment scale in response to regulatory tightening.
At today's performance briefing, investors also noted that jiangsu changshu rural commercial bank's fair value change loss disclosed in the third quarter report has changed from a positive 8.976 million yuan at the end of the first half of the year to a negative 0.115 billion yuan, and questioned the reasons behind the change in data provided by management.
President Bao Jian explained that the main reasons for the decrease in fair value change income are: firstly, dividends realized from trading funds are included in investment income, leading to a decrease in net value causing a reduction in fair value change loss; secondly, with market price fluctuations along with investment business, valuations will accordingly fluctuate dynamically.
It is still unclear whether dividend payments can be increased or if mid-term dividends can be added.
In addition, dividend payouts and stock performance are also key concerns for investors. At today's performance briefing, several investors candidly asked, "The company's performance is good, but the dividends are not high. Can the management increase dividends?"
The board secretary Tang Zhifeng responded that the bank's dividend arrangements are mainly based on the following considerations: First, the bank is in a development stage, retaining profits to supplement core Tier 1 capital appropriately, ensuring the continuous replenishment of internal capital, which is conducive to better serving the real economy, promoting the bank's high-quality sustainable development; second, sufficient capital is beneficial for the continuous enhancement of the bank's value creation ability, providing investors with a better and more reasonable long-term return; third, fully considering the regulatory requirements for capital adequacy ratios, complying with the trend of stricter capital regulation, and further enhancing risk resilience.
The Caixin reporter noticed that the response is similar to the explanation given in the Jiangsu Changshu Rural Commercial Bank's 2023 annual profit distribution plan announcement regarding the "explanation of the situation where this year's cash dividend ratio is below 30%."
Tang Zhifeng said that in the future, the bank will strive to create high-quality performance to reward investors based on profit levels, regulatory requirements on capital adequacy ratios, and factors related to the sustainable development of the bank's business.
According to the Jiangsu Changshu Rural Commercial Bank's 2023 annual profit distribution plan announcement, the bank's cash dividend ratio for that year is 20.88%. Wind data shows that the bank's average dividend payout ratio since listing is 23.20%, with a dividend yield (in the past 12 months) of 3.2%, ranking 39th out of 42 in the industry. As of now, the bank has not announced whether it will increase the mid-term dividend. This performance briefing did not mention it either.
