Wallstreetcn
2024.04.03 02:22
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Bank of China 2023 Performance Conference: Actively and orderly advancing mid-term dividends

China Construction Bank held its 2023 annual performance conference, addressing hot topics such as fee reduction, mortgage situation, and dividend plans. The bank stated that fee reduction is a common pressure faced by the banking industry, but the decrease in agency fees is conducive to the transformation of commercial banks' agency business from price competition to quality competition. China Construction Bank will stabilize fee income growth by leveraging its advantages in comprehensive financial services for corporate clients, consolidating its advantages in retail banking business, and accelerating the construction of asset management business research and development capabilities. The management has formulated specific plans and increased resource allocation and incentive efforts

On April 2, China Construction Bank held its 2023 annual performance conference. CCB Chairman Zhang Jinliang attended the conference with senior management to address issues such as the impact of fee reductions, the latest situation on mortgage loans, and future dividend plans.

The most concentrated challenge at present is fee reduction

In the fourth quarter of 2023, both the fund and insurance industries introduced some measures to reduce fees and offer benefits, which will continue to affect the bank's intermediary income in 2024. Liu Fanggen, General Manager of CCB's Financial Accounting Department, admitted that challenges and opportunities coexist in 2024. The most significant and concentrated challenge currently is fee reduction.

"It should be said that fee reduction is a common pressure faced by our banking industry. Financial management has entered the era of low fees, and regulations on fee reduction have been successively introduced in insurance and fund custody. For insurance, we estimate that it will affect 30%. In the short term, the decline in these rates does put pressure on the growth of our intermediary business fees. However, in the medium to long term, the decline in agency fees is also conducive to the transformation of commercial banks' agency business from price competition to quality competition," said Liu Fanggen.

Liu Fanggen further stated that while recognizing the challenges, it is also necessary to see good opportunities. With the macroeconomic recovery improving, there is still a broad space for the development of intermediary businesses.

Three measures to promote stable growth of fees

Liu Fanggen also revealed that CCB will take measures from three aspects to maintain stable growth in fee income.

The first aspect is to leverage CCB's advantages in comprehensive financial services for corporates, focusing on specialized and innovative strategic areas such as emerging industries and advanced manufacturing. This includes exploring the growth potential of M&A business, bond underwriting, advisory consulting, and other services.

The second aspect is to consolidate the advantages of CCB's retail banking business, expand the scale of wealth management, and enhance the coverage of products such as wealth management, funds, insurance, precious metals, and bonds.

The third aspect is to accelerate the construction of asset management business research capabilities, providing customers with a more diverse, open, and high-quality product shelf to enhance the value and risk of asset management business.

Liu Fanggen also disclosed that at the beginning of this year, the management had already formulated specific plans for fee income, while also increasing resource allocation and incentive mechanisms. It is believed that through the efforts of the entire bank, fee income for this year can be stabilized.

How to deal with the new situation of mortgage loans

Regarding mortgage loans, CCB Vice President Li Yun stated that after the adjustment of existing mortgage loan interest rates, customers have reduced their interest expenses to some extent, which has helped reduce the motivation for early repayment of loans. The scale of early repayment of mortgage loans in the first three months of this year at CCB has decreased compared to the fourth quarter of last year.

At the same time, Li Yun revealed that according to CCB's data, since March, the acceptance volume of housing mortgage loans, especially second-hand housing mortgage loans, has shown a slight increase compared to the previous month.

Li Yun mentioned that in the next step, CCB will actively meet the reasonable financing needs of the real estate supply side while further improving housing mortgage financial services, especially focusing on three aspects of mortgage financial services: optimizing the online process of mortgage services, providing personal loan services for affordable housing, and establishing a mortgage loan mechanism for farmers in developed county areas building their own houses

Maintaining a 30% Dividend Payout Ratio

In 2023, the Board of Directors of China Construction Bank (CCB) proposed to distribute an annual cash dividend of RMB 0.40 per share (tax included), totaling RMB 1000.04 billion.

In response, CCB's Chief Financial Officer Sheng Liurong stated that since 2015, CCB's dividend payout ratio has been maintained at around 30%. CCB hopes to continue this level of dividend payout.

"The 30% dividend payout ratio is unlikely to change," Sheng Liurong said.

Sheng Liurong also revealed that the China Securities Regulatory Commission (CSRC) had previously issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)", encouraging listed companies to distribute dividends multiple times a year. CCB is studying various factors such as shareholders' intentions, capital supplementation, regulatory requirements, and long-term sustainable development, striving to promote mid-term dividends in a lawful and compliant manner in an active and orderly manner