Caixin News on November 7th (Reporter: Liang Kezhi): Ping An Bank announced in the evening that the current 20 billion perpetual bonds with no fixed term were issued on November 7, 2024: the fixed interest rate for the first 5 years is 2.45%, adjusted every 5 years, with conditional redemption rights granted to the issuer after the 5th year and on each interest payment thereafter.

In the third-quarter report, Ping An Bank stated that it continues to strengthen its internal capital accumulation capabilities, enhance the precision of capital management, and by the end of September 2024, on a group basis, the core Tier 1 capital adequacy ratio rose slightly to 9.33%. The data shows that its net core Tier 1 capital amount is 479.1 billion yuan, a slight increase from 454.8 billion yuan at the end of last year.

Caixin News reporters noticed that China Merchants Bank just announced on November 7th that it recently successfully issued 30 billion perpetual capital bonds with no fixed term, at a fixed interest rate of 2.42%.

On November 7th, a banking analyst from a brokerage in Beijing told Caixin News that most perpetual bonds are issued in a rolling manner, and it is quite common for them to be extended upon maturity or replaced by low-interest-rate bonds.

The announcement shows that the last time Ping An Bank issued perpetual bonds with no fixed term was completed on February 25, 2020, with a scale of 30 billion yuan, a fixed interest rate of 3.85% for the first 5 years, significantly different from the current 2.45% issuance rate.

All types of capital replenishment plans are progressing.

Compared to Ping An Bank, China Merchants Bank has stronger internal replenishment capabilities. According to the senior law calculation, CMB's core Tier 1 capital adequacy ratio is 14.73%, Tier 1 capital adequacy ratio is 16.99%, and capital adequacy ratio is 18.67%, increasing by 1.00%, 0.98%, and 0.79% respectively compared to the end of the previous year. The net amount of tier 1 capital increased by 6.88% from the end of the previous year to 1130.5 billion.

On March 25, cm bank announced that the capital issuance authorization plan applied for at the shareholders' meeting in 2021, not exceeding 150 billion, has expired, and a new equivalent authorization plan has been re-applied for, with a limited period extended to 3 years and a cumulative scale not exceeding 77 billion, allowing the board of directors to authorize senior management to issue directly.

Before the joint-stock banks, since the announcement on September 24, the country has declared the initiation of substantial work on capital replenishment for large state-owned commercial banks to increase core tier one capital.

At a recent third quarter earnings conference, leaders of several major banks revealed the latest progress on capital supplementation externally.

According to the relevant person in charge of the Industrial and Commercial Bank of China, the specific content of the capital injection scale and pricing pace has not yet been clarified. ICBC is preparing relevant investment plans and actively communicating and reporting with regulatory authorities.

According to calculations by china international capital corporation, if the capital injection increases the core tier one adequacy ratio of the six major banks by 0.5 percentage points, 1 percentage point, and 2 percentage points, the required capital injection scale would range from 0.5 trillion yuan to 2.1 trillion yuan.

Senior bonds may expand.

Caixin reporter found in recent announcements that Minsheng Bank, Hua Xia Bank, Bank of Beijing, and others have successfully issued various types of capital bonds.

On November 7, china international capital corporation released a latest report stating that with the regulatory focus on capital, banks calculated using the senior bond method may expand the scope.

On November 1st, the China Banking and Insurance Regulatory Commission issued the "Regulations on Application and Acceptance of Advanced Capital Measurement Methods by Commercial Banks". After the revision on January 1, 2024, the official implementation of the revised "Regulations on Capital Management of Commercial Banks" (referred to as the "New Capital Rules") is widely viewed in the market as further enhancing requirements and standards for bank capital management.

It is understood that in 2014, the first batch of banks approved to implement the advanced methods included ICBC, ABC, BoC, CCB, CMB, and CITIC.

Analyst Lin Yingqi believes that in recent years, some banks have also applied for the implementation of advanced methods. This "Acceptance Regulation" clarifies the acceptance criteria, acceptance procedures, and continuous supervision framework of advanced methods. Implementing banks are expected to expand, with Postal Savings Bank, Bank of Communications, and other leading joint-stock banks likely to be included.

Regarding the impact of implementing the advanced methods, a report by China International Capital Corporation predicts that theoretically, the proportion of capital savings for banks is around 10%-20% with the implementation of advanced methods. This is equivalent to increasing the core Tier 1 capital adequacy ratio by 1-2 percentage points, theoretically leading to an increase of 1-2 percentage points in long-term ROE.