A number of banks have raised their dividend payouts, with China Merchants Bank raising its dividend payout ratio to 35% and Ping An Bank's dividend yield as high as 7.2%
Text丨Wu Haishan
Editor丨Lin Weiping
On March 26, Miao Jianmin, chairman of China Merchants Bank, said at the 2023 annual results conference of China Merchants Bank: "Since our dividend payout rate has increased, we have no intention of lowering it again. ”
In parallel with the release of the 2023 results, China Merchants Bank announced that it will increase its dividend payout ratio to 35% in 2023. In the past few years, China Merchants Bank's dividend payout ratio has been 33%.
Affected by this news, as of the close of trading on March 26, the share price of China Merchants Bank closed up 3.35%.
China Merchants Bank is not the only bank to raise its dividend payout, including Ping An Bank, China CITIC Bank and many other banks have announced an increase in dividend payout.
Since October 2023, the regulator has continued to push forward the dividend payouts of listed companies, and S&P Indices believes that the dividend culture of A-shares has made significant progress.
Financials, including banks, contributed the largest share of all A-share sectors, at 34% at the end of 2023. In this round of regulatory efforts to increase corporate dividends, banks are still in the forefront.
China Merchants Bank's dividend payout ratio increased to 35%
Ping An Bank's dividend payout ratio is as high as 7.2%
China Merchants Bank announced the 2023 dividend distribution plan to distribute a cash dividend of RMB 1.972 per share (tax included) to shareholders of record based on the total share capital of A shares and H shares on the record date of the implementation of profit distribution.
Miao Jianmin calculates that according to the dividend payout ratio of 35%, the payout rate of China Merchants Bank's A shares is 6%, and the payout rate of H shares is 7%.
According to Ma Xiangyun, an analyst at Changjiang Securities, after the increase in the dividend payout ratio this time, the planned dividend yield of China Merchants Bank's A-shares in 2023 will be 6.29%. Ma Xiangyun called China Merchants Bank "the bank stock with the most outstanding ability to pay dividends in the medium and long term." ”
As a leading joint-stock bank, China Merchants Bank has been favored by the capital market for many years, but due to a variety of factors, its performance in the capital market in 2023 is relatively average, with its share price falling by 21.2% for the year, ranking 37th among 42 listed banks, and a price-to-earnings ratio (TTM) of 4.84 times as of December 31, 2023.
Miao Jianmin said at the results meeting: "Last year, most of our shareholders did not make much money on capital gains, or did not make money, so raising a little dividend can improve the overall return of shareholders", he said that at present, "China Merchants Bank should be a value bank with low valuation and high dividends." "As of the close of trading on March 27, China Merchants Bank traded at a price-to-earnings ratio of 5.56 times.
China Merchants Bank is one of the few A-share banks that has written a payout ratio of not less than 30% into its charter, and the payout ratio has been maintained at around 33% for the past four years.
Zheng Qingming, an analyst at Shenwan Hongyuan, said that China Merchants Bank's increase in dividend payout ratio highlights the bank's implementation of measures to better feedback investors in the context of slowing expansion of risk assets and less capital pressure.
Among the banks that have published their annual reports, China Merchants Bank is not the only bank to increase its dividend payout ratio, or even the most. Ping An Bank, which was the first to release its 2023 financial report, has increased its dividend payout ratio even more.
On March 15, Ping An Bank announced that it would distribute a cash dividend of RMB 7.19 (tax included) to all shareholders for every 10 shares based on the end of 2023, with no bonus shares and no share capital conversion from provident fund, with a dividend payout ratio of 7.2%.
Compared with the past few years, Ping An Bank's dividend payout ratio has increased significantly.
For example, in 2022, Ping An Bank will distribute cash dividends of RMB 2.85 (tax included) for every 10 shares, with no bonus shares and no share capital conversion from provident fund. In the previous three years (2019~2021), they were 2.28 yuan, 1.8 yuan and 2.18 yuan per 10 shares.
From the perspective of the proportion of dividends to shareholders' net profit, compared with 12% in the past two years (2021~2022), Ping An Bank will directly increase to 30% in 2023. "Ping An Bank can still guarantee higher dividends during the earnings growth adjustment period, which will boost shareholder confidence. Guotai Junan Securities analyst Liu Yuan said.
It is worth noting that China Merchants Bank and Ping An Bank both increased their dividend payout ratios when their revenue fell slightly and net profit attributable to shareholders increased slightly. For the whole year of 2023, China Merchants Bank achieved revenue of 339.123 billion yuan, a year-on-year decrease of 1.64%, and net profit attributable to shareholders of the bank was 146.602 billion yuan, a year-on-year increase of 6.22%. In 2023, Ping An Bank will achieve revenue of 164.699 billion yuan, a year-on-year decrease of 8.4%, and a net profit of 46.455 billion yuan, a year-on-year increase of 2.1%.
A number of banks have increased their payout ratios
Rational expectations should be maintained for small and medium-sized banks
In addition to China Merchants Bank and Ping An Bank, other banks are also raising their dividend payouts.
According to the 2023 profit distribution plan of China CITIC Bank, which released its financial report at the same time as China Merchants Bank, it intends to distribute a cash dividend of RMB 3.56 (tax included) for every 10 shares, accounting for 28.01% of its net profit attributable to ordinary shareholders after consolidation in 2023. Compared with the past few years, there has also been a relatively large improvement. From 2019 to 2022, China CITIC Bank paid dividends of 2.39 yuan, 2.54 yuan, 3.02 yuan and 3.29 yuan per 10 shares, respectively, while the proportion of cash dividends to shareholders' net profit also continued to increase, at 25.05%, 27.04%, 28.08% and 28.09% respectively.
Among the urban and rural commercial banks, Changshu Bank also released its dividend plan. The bank said it would distribute a cash dividend of RMB 2.50 (tax included) for every 10 shares based on the total share capital, and use the capital reserve to increase 1 share for every 10 shares to all shareholders.
In terms of the extended cycle, Changshu Bank's dividend payout is the same as in 2022. In 2022 and 2021, Changshu Bank will pay cash dividends of 2.5 yuan and 2.0 yuan per 10 shares, respectively. However, in terms of the proportion of dividends to profits attributable to listed companies and ordinary shareholders, Changshu Bank has continued to decline in the past three years, with 25.05%, 24.97% and 20.88% from 2021 to 2023, respectively.
Weihai Commercial Bank's 2023 performance report decided to distribute a cash dividend of 10 yuan (tax included) to all shareholders for every 100 shares, and Weihai Bank has maintained this dividend amount in the past few years. It is worth noting that Bank of Tianjin, which has not paid dividends for three consecutive years, has also launched a dividend plan in 2023, and it plans to pay a cash dividend of 1.2 yuan for every 10 shares.
Ma Xiangyun said that "it is necessary to maintain rational expectations for the increase in the dividend payout ratio of small and medium-sized banks", because on the one hand, capital pressure constraints, it is difficult for banks to raise equity financing in the future, and on the other hand, the current key risks such as real estate and urban investment have not been completely resolved, and banks pay more attention to capital retention.
However, he is still optimistic about the investment value of some city commercial banks, mainly including two categories: one is the head city commercial banks with high growth + high dividends, such as Bank of Jiangsu and Bank of Chengdu, and the other is the banks with stable operation and long-term stable dividend ratio, such as Chongqing Rural Commercial Bank, Bank of Beijing and Bank of Shanghai, etc., the current static dividend yield of these three banks is 5.93%, 5.47% and 5.99% respectively.
Regulation pushes listed companies to increase dividends
The importance of a high-dividend strategy is highlighted
In fact, in recent years, Chinese regulators have continued to push Chinese listed companies to increase their dividend ratios.
For example, in October 2023, the regulator revised the relevant provisions of the "Guidelines for the Articles of Association of Listed Companies" on cash dividends to solicit opinions from the public. On March 15 this year, the "Opinions on Strengthening the Supervision of Listed Companies (Trial)" was released, which clearly stated that it was necessary to "strengthen the supervision of cash dividends and enhance investor returns".
The specific measures mainly include three points: first, to adopt strong restraint measures on dividends, requiring listed companies to formulate active and stable cash dividend policies, and clarify investor expectations. For listed companies that have not paid dividends for many years or have a low dividend payment ratio, they will strengthen regulatory constraints by means of mandatory information disclosure, restrictions on controlling shareholders' shareholding reductions, and the implementation of other risk warnings (ST); Urge companies with more financial investment to increase the proportion of dividends. Improve the information disclosure evaluation system, increase the weight of dividends, and clearly reflect the encouragement of dividend orientation. Strengthen the constraints of inquiries and interviews and regulatory measures, and urge companies that do not pay dividends or pay less dividends to increase the level of dividends. Third, at the same time, we will promote multiple dividends a year. Guide high-quality large-capitalization listed companies to pay dividends in the medium term, and play an exemplary and leading role.
Ye Jiasheng, director of factor and thematic indices at S&P Dow Jones Indices, told this magazine that the A-share market has made significant improvements in cultivating a dividend payment culture in the past year. According to his statistics, in 2010, only 897 A-share companies paid dividends, and by 2023, this number has grown to 3,289. At the same time, Ye Jiasheng's statistics show that as of December 31, 2023, 132 A-share companies will provide interim dividends, he told this magazine: "Interim dividends or quarterly dividends have been relatively mature in the U.S. stock market, and most A-share companies are currently paying annual dividends, and more Chinese companies may start interim dividends in the future." ”
From the perspective of industries, in terms of dividends and dividends, the financial industry, including banks, has always been the "top student" of A-share dividends.
According to Ye Jiasheng's research, historically, dividends in China's A-share market have been concentrated in the financial, energy and industrial sectors, with the financial sector accounting for 50% of the total A-share dividends from 2010 to 2016. However, over the past seven years, the contribution of financial and energy dividends has declined. For example, as of the end of 2023, finance is still the sector with the most dividends in A-shares, contributing 34%, significantly exceeding its weight in the stock market.
On March 28 and 29, banks also ushered in the highlight of the earnings release, and the five major state-owned banks will also release their 2023 financial reports. Ma Xiangyun expects that in the medium term, large state-owned banks will still be able to maintain stable profits and the proportion of +30% dividends will remain unchanged.
State-owned banks that consistently pay high dividends are in most cases compared to fixed-income products such as government bonds. In the current scenario, China is going through a cycle of interest rate cuts, with five-year government bonds yielding less than 3%, compared to the current average dividend yield of the five largest state-owned banks at 5.63%. The spread with the yield on the 10-year Treasury note is nearly 300 percentage points.
Ye said that after witnessing the continued decline in valuations in sectors including the internet, some investors have turned to high-dividend strategies to demand returns. In particular, the U.S. has continued to raise interest rates since 2022, with the federal funds rate exceeding 5%, "and this is when the high-dividend strategy is even more important in the A-share market." ”
(This article was published in the "Securities Market Weekly" on March 30, and the original title was "Many Banks Increase Dividend Payouts, and China Merchants Bank's Payout Ratio Rises to 35%.") The individual stocks mentioned in the article are only for example analysis and do not make investment advice. ）