Aiming at the time window, listed banks accelerate equity financing "blood replenishment"

Securities Times reporter Duan Jiuhui

As of last week, the bank's third quarter 2021 report was disclosed. Overall, the 41 A-share listed banks have achieved a "double rise" in revenue and net profit, and the non-performing ratio has also declined. The Securities Times reporter noted that while the performance indicators improved, the equity financing of A-share listed banks was also significantly increased.

On the occasion of the disclosure of the third quarterly report, Wuxi Bank issued a pre-increase plan, which intends to privately issue no more than 320.5 million shares (including the principal number) and raise up to 2 billion yuan (including the number of shares); Zheshang Bank issued a rights issue plan, and the total amount of funds to be raised by the proposed rights issue does not exceed 18 billion yuan, all of which are used to supplement the core Tier 1 capital. Among them, zheshang bank's allotment financing is the fourth listed bank allotment financing after seven years after the Bank of Jiangsu last year.

The two banks intend to raise funds to supplement capital

Two banks also disclosed equity financing plans while announcing their third quarterly reports.

Among them, the preliminary plan for the non-public issuance of A-share shares issued by Wuxi Bank shows that the number of A-share shares issued by the bank in this non-public offering does not exceed 320.5 million shares (including the number of shares), and the total amount of funds raised does not exceed 2 billion yuan (including the number of shares), which will be used to supplement the core Tier 1 capital after deducting the relevant issuance fees.

According to this rough estimate, the fixed issue price of Wuxi Bank may be 6.24 yuan / share, and on the day of the release of the increase plan, the closing price of Wuxi Bank is 5.95 yuan, with a premium rate of about 5%.

According to the regulations, in terms of the issue price, the pricing base date is the first day of the issuance period of the non-public offering, and the issue price is not less than 80% of the average trading price of Wuxi Bank's A-share shares in the 20 trading days before the pricing benchmark date (excluding the pricing benchmark date, the same below) (retaining two decimal places according to the "progressive method") and the higher of the net asset value per share attributable to the common shareholders of the parent company audited by Wuxi Bank at the end of the latest period before the issuance. Of course, these are subject to regulatory approval and the Board of Directors will make an inquiry as required in accordance with the authorization.

According to the third quarterly report of Wuxi Bank, as of the end of September 2021, there are 2 shareholders of Wuxi Bank holding more than 5% of the shares, namely Guolian Trust Co., Ltd., which holds 8.93% of the shares, and Wuxi Xingda Nylon Co., Ltd., which holds 5.96% of the shares.

"Based on the maximum number of shares in this non-public offering, after the completion of this non-public offering, the total share capital of Wuxi Bank will increase from 1.862 billion shares to 2.182 billion shares." Bank of Wuxi said that before and after the issuance, the above two shareholders are still shareholders of Wuxi Bank holding more than 5% of the shares, and there will be no major changes in the equity structure of Wuxi Bank.

Another bank that disclosed its financing plan was Zheshang Bank. Zheshang Bank announced on the same day of the disclosure of the third quarterly report that it intends to place no more than 3 shares per 10 shares to all shareholders of the original A-share shares, and the total amount of funds raised by the placement will not exceed 18 billion yuan, which will be used to supplement the core Tier 1 capital and support the steady development of various businesses in the future.

From the perspective of the scale of fundraising, Zheshang Bank raised funds lower than jiangsu bank that also raised shares last year, but the proportion of allotments was the same as that of bank of Jiangsu, which was the highest proportion under regulatory requirements.

According to the Measures for the Administration of securities issuance by listed companies, the number of shares to be placed shall not exceed 30% of the total share capital before the placement of shares. According to the announcement, based on the total share capital of Zheshang Bank as of June 30, 2021 of 21.269 billion shares, the number of shares placed by the bank does not exceed 6.38 billion shares, of which the number of A shares and H shares is not more than 5.014 billion shares and 1.366 billion shares, respectively.

From the perspective of shareholder structure, zheshang bank's third quarterly report shows that as of the end of September, the total number of shareholders of the bank was 273,000, and the shareholding ratio of the top ten shareholders was 63.67%.

The key is pricing

In recent years, commercial banks, especially small and medium-sized banks, have been trapped in the pressure of replenishing capital. Listed banks supplement core Tier 1 capital mainly include endogenous supplementation and exogenous supplementation, the former can be supplemented by retained profits, and the latter includes fixed increases, allotments, and issuance of convertible bonds. "Among the various fundraising methods, such as fixed increase and convertible bonds, there is no conflict, but the efficiency of fundraising will be different." A relevant person from a listed bank in East China told the Securities Times reporter.

In contrast, the time of convertible debt-to-equity conversion is uncertain, generally as short as one year, as long as three to four years; and if the rights issue, the fundraising efficiency will be higher, after the Jiangsu Bank's allotment from the disclosure plan to the final successful implementation, it took less than 6 months.

For the fixed increase method, when the Bank of Ningbo disclosed the fixed increase plan before, some insiders told the Securities Times reporter that "the threshold for the fixed increase is higher (the pricing is not less than the latest audited net assets per share), the approval process is longer; at the same time, the bank as a state-owned financial institution, its fixed increase price is constrained, and shareholders are willing to participate in the fixed increase, in fact, from the perspective of long-term strategic cooperation business, they are optimistic about the development and transformation of the bank." ”

The Bank of Wuxi also mentioned the necessity of this capital replenishment in the fixed increase plan, one is to improve the level of capital adequacy and meet the requirements of capital supervision; the other is to meet the needs of business development and enhance the ability to serve the real economy. As of the end of September this year, the bank's deposit balance was 161.240 billion yuan, an increase of 14.09% over the end of the previous year; the loan balance was 116.305 billion yuan, an increase of 16.66% over the end of the previous year, the loan growth rate was higher than the deposit growth rate, and maintaining the stable development of business and asset scale inevitably required sufficient capital replenishment. In addition, Wuxi Bank proposed that it will be based on the local financial market, focusing on supporting "three rural areas" and small and micro enterprises, and serving the local economic development also needs to consolidate the capital base.

With the increasing number of exogenous capital replenishment schemes of listed banks, pricing issues have also attracted market attention. For example, huaxia bank's premium fixed increase has caused heated discussions, and there are fixed increase participants who float losses. Of course, from the perspective of the performance of the secondary market, there is no shortage of cases where the investment of the participants has "floating profits", such as the fixed increases completed by Bank of Hangzhou and Bank of Ningbo in April 2020 and May 2020 respectively.

In the view of market participants, one of the key factors in whether the rights issue plan has a negative impact on the bank's stock price and how long it will affect is also to look at the pricing of the rights issue. For example, Bank of Jiangsu and Bank of Ningbo, which have completed the allotment of shares, previously had a discount rate of 25% and 46% respectively. Judging from the performance of the secondary market, after the release of the two banks' share allotment plans, the stock prices in the secondary market did fluctuate, but the impact also faded rapidly.

What is the impact of the large increase in scale?

According to Wind statistics, in the first half of this year, A-share listed banks have implemented and planned to raise a total of more than 410 billion yuan, which has exceeded 404.279 billion yuan and 389.736 billion yuan in the same period of 2020 and 2019.

In particular, this year's financing through fixed increases and allotments has increased significantly compared with previous years. For example, the allotment financing of Zheshang Bank is also the fourth bank allotment financing in the past year or so, after Bank of Jiangsu (raising 20 billion yuan), Bank of Ningbo (raising 12 billion yuan) and Bank of Qingdao (raising 5 billion yuan, accepted by the CSRC).

Although the impact of the epidemic, fee reduction and profit concessions and other events has gradually faded, "but this year, banks should accelerate credit delivery and support the real economy, but still maintain a relatively fast expansion rate, these factors make the bank financing gap will further expand, and the desire for core Tier 1 capital is even greater." Ma Xiangyun, chief banking analyst of Soochow Securities Research Institute, told the Securities Times reporter.

On the one hand, the bank capital consumption is relatively fast, in the regulatory department to focus on supporting small and medium-sized banks to supplement capital through multiple channels, banks in addition to endogenous accumulation of supplementary capital, but also urgently need exogenous capital "replenishment"; on the other hand, many institutional people also mentioned that the current credit and monetary environment is relatively loose, and the valuation of the banking sector is at a historical low, "this year the overall trend of the banking sector is good, the time window for refinancing has arrived."

Judging from the three quarterly reports, the net profit of Zhangjiagang Bank, Changshu Bank, Wuxi Bank, Bank of Hangzhou, Ping An Bank, China Merchants Bank and many other banks increased by more than 20% year-on-year. Stimulated by the good performance and improved interest margins released in the third quarter, as of the close of trading on October 29, the Shenwan Bank Index has risen by 2.94% in the past 20 days, and the banking sector has also become one of the five best performing sectors this year.

From the perspective of funds, Wind data shows that compared with the past, in addition to large banks and some excellent joint-stock banks and city commercial banks, some regional banks with better operating performance have also obtained the counter-trend increase of active management funds, and the positions of Chengdu Bank, Changshu Bank and Sunong Bank in the third quarter have increased by 1 BP compared with the end of the second quarter.

For example, in the third quarter of this year, Zhonggeng Value Quality and Zhonggeng Value Pilot managed by star fund manager Qiu Dongrong bought 31.4907 million shares and 22.5101 million shares of Changshu Bank respectively, the former of which has ranked as the eighth largest outstanding shareholder of the bank; at the same time, Yau Dongrong also bought 61.1426 million shares, 40.2039 million shares and 16.1226 million shares of Sunong Bank through its management of Zhonggeng Value Pilot, Zhonggeng Small Cap Value and Zhonggeng Value Smart, respectively, and the three products ranked second, fourth, and third in Sunong Bank. Nine outstanding shareholders.

In the view of analysts, there is a certain logic behind this, that is, the differentiation of bank performance under the differentiation of economic structure is also expanding. The research report released by CICC a little earlier believes that individual banks have taken the lead in card slots, and both performance and valuation occupy the position of the head bank; the scale first-mover advantage, stock resource endowment and corporate governance efficiency determine that the trend of inter-institutional differentiation will continue or even become more significant.

The above-mentioned research report also said that the restructuring of the income statement will bring about a switch in the valuation system of the head bank from the valuation of the price-to-book ratio (P/B) to the valuation of the price-to-earnings ratio (P/E). In this regard, Wang Jian, chief analyst of the financial industry of Guosen Securities, said that for banks with high-quality endowments and strong profit-making ability, "replenishing capital is not a matter at all, because capital will rush to participate in it." ”