CBN丨Key banks eye 520 billion yuan via placements as sector is challenged by limited profit growth

Hi everyone. I’m Stephanie LI.

Coming up on today’s program

• China’s 4 state-owned banks will bring in Finance Ministry as strategic investor, a move to reinforce capital adequacy;
• Immigration authority forecasts 2.1 million passenger border crossings during upcoming Qingming holiday.

Here’s what you need to know about China in the past 24 hours

China's major State-owned commercial banks plan to raise up to 520 billion yuan via private placements from investors, including the finance ministry, a forward-looking move which analysts said will help forestall financial risks and better support the real economy.

The fundraising aims to replenish core tier-1 capital — the core capital held in a bank's reserves — to help ensure that the financial system has the necessary resilience and lending capacity to support the economy's transition toward innovation and consumption-led growth, they said.

Bank of Communications, Bank of China, Postal Savings Bank of China and China Construction Bank announced plans on Sunday to raise a combined 520 billion yuan through additional offerings through the Shanghai Stock Exchange.

The Ministry of Finance will fully subscribe to the new shares issued by Bank of China and China Construction Bank, while also taking up over 90 percent of the new shares offered by Bank of Communications and Postal Savings Bank of China, committing a total of 500 billion yuan in cash subscriptions.

The banking sector is currently facing challenges of limited profit growth, primarily due to factors such as narrowed net interest margins. This constraint has hindered the capacity to strengthen capital reserves through retained earnings, necessitating external capital infusions.

After capital replenishment, it is expected that these banks will notably boost credit issuance, with a specific focus on channeling additional financial resources toward strategic fields, including tech-focused small and medium-sized enterprises and strategic emerging industries.

The ministry said in a statement on Monday that it will issue the first batch of 500 billion yuan in special government bonds in 2025, with the proceeds earmarked to support the core tier-1 capital replenishment of major State-owned banks.

According to the latest financial data, the core tier-1 capital adequacy ratios for the four lenders as of the end of last year were well above regulatory minimums of 5 percent.

The bank-specific and market-oriented approach to capital replenishment is a forward-looking strategic arrangement, prioritizing the long-term financial stability and growth of the real economy, experts said, adding that by leveraging a multiplier effect of eight, the 500-billion-yuan capital injection can potentially catalyze 4 trillion yuan in additional lending capacity.

GBA express

• Hong Kong and Shenzhen will establish a co-location checkpoint in Shenzhen for the planned Hong Kong-Shenzhen Western Rail Link, with no customs facilities on the Hong Kong side, the government told a Legislative Council panel yesterday. The rail link will connect Hong Kong's Hung Shui Kiu to Qianhai in Shenzhen.

Industry and company news

• China is expected to handle a daily average of 2.1 million entry-exit passenger crossings during the upcoming Qingming Festival holiday (from Friday to Sunday), up 21.4 percent from a year earlier, the National Immigration Administration said on Tuesday.
• XPeng’s flying car unit said it has secured a 1.26 billion yuan syndicated loan to support the construction of a mass production facility for its flying car model. This is the world’s largest syndicated loan for producing flying cars, XPeng AeroHT said in a Weibo post on Tuesday. Also Xpeng Motors' deliveries more than tripled to 33,205 vehicles last month from a year earlier, its fifth consecutive month with over 30,000 deliveries, the Chinese NEV maker said today. Its quarterly deliveries surged more than fourfold to 94,008 units from a year ago.
• Ubtech Robotics is expected to produce 1,000 humanoid bots this year, with the target for next year set at 5,000-10,000, said Founder and Chairman Zhou Jian. The bill of materials cost for the industrial humanoid robot is now controlled under 500,000 yuan, he added.
• BYD refuted media reports claiming the Chinese NEV giant is mulling setting up a car factory in Hyderabad, the capital city of India's southern Telangana state, with an expected investment of 10 billion yuan.
• Xiaomi Auto delivered 29,000 SU7 in March, the EV unit of Chinese tech giant Xiaomi said on Weibo today, adding that it is confident to meet the annual sale target of 350,000 units. Xiaomi Auto announced last month it would hike the capacity of its second plant in Beijing.
• China will encourage banks to increase credit loans and medium- and long-term loans to technology enterprises, the National Financial Regulatory Administration said in a statement on Tuesday. Banks can extend the term for working capital loans to such enterprises to a maximum period of 5 years.
• Several Chinese banks received regulatory notices requiring them to suspend the issuance of consumer loan products with interest rates below 3 percent from this month to standardize the market and avoid financial risks, media reported today. Data show that online consumption loan interest rate of Chinese national banks was 2.91 percent in February, much lower than the 3.1 percent one-year loan prime rate in the past five months.
• Nanjing, the capital city of China’s Jiangsu province, yesterday lifted home resale restrictions, as part of its measures to promote the property sector. This allows commercial homes to be listed for sale as soon as the owner obtains a property ownership certificate.

Asia-Pacific highlights

• Multiple rescue teams from China have rescued six survivors, including a pregnant woman, in earthquake-hit Myanmar as of 8 am local time on Monday, as the first group of emergency humanitarian aid from China arrived in the Southeast Asian country. Around 400 Chinese personnel, including experts, rescuers and medical workers, have been assisting in the disaster relief efforts in various places in Myanmar. On Monday, the first shipment of emergency humanitarian earthquake relief supplies worth 100 million yuan provided by the Chinese government arrived in Yangon, including tents, first aid kits, food and drinking water, Chinese Foreign Ministry spokesman Guo Jiakun said at a regular news conference. Meanwhile, rescue and medical teams from across the Asia-Pacific region, including India, Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines, are continuing relief and search operations in Myanmar.
• Myanmar's Department of Meteorology and Hydrology reported on Monday that 36 aftershocks, with magnitudes ranging from 2.8 to 7.5, have occurred as of Monday morning. Also, a 6.0-magnitude earthquake struck off Indonesia's East Nusa Tenggara province on Monday evening without triggering large waves.
• The Japanese government on Monday released an updated projection, saying that nearly 300,000 people could be killed if an anticipated massive earthquake occurs in the Nankai Trough off the country's Pacific coast. Japan's GDP could nearly be halved, losing as much as JPY270 trillion (USD1.81 trillion) under the worst-case scenario, as the country will likely evacuate 1.23 million people, around 1 percent of its population.

Executive Editor: Sonia YU

Editor: LI Yanxia

Host: Stephanie LI

Writer: Stephanie LI

Sound Editor: Stephanie LI

Graphic Designer: ZHENG Wenjing, LIAO Yuanni

Produced by 21st Century Business Herald Dept. of Overseas News.

Presented by SFC

更多内容请下载21财经APP