Since this year, bank financing has exceeded 2 trillion yuan. After deducting the maturity scale of existing bonds, the annual net financing is expected to exceed trillion yuan.
According to the latest statistics of SSE Information, from various data, an obvious feature of the bank's "blood replenishment" this year is that the refinancing (IPO, fixed increase, allotment of shares and convertible bonds) that can supplement the core tier 1 capital is very active. The scale has been implemented more than 140 billion yuan, more than three times that of last year, and the proposed financing scale of the disclosure plan is also 130 billion yuan.
Under the current policy guidance of actively supporting the real economy, banks have two reasons for such large-scale financing: first, affected by the epidemic situation, fee reduction and profit transfer, and at the same time, they have to speed up the investment of assets, and the ability of banks to supplement through endogenous capital (profit retention) is limited; Second, affected by the regulatory framework of total loss absorption capacity (Chinese version TLAC), some banks' core tier 1 capital is under pressure.
Market analysts predict that banks will still maintain a considerable amount of financing in 2022.
refinancing active convertible bonds are the most popular
There are generally two ways for banks to supplement capital: one is endogenous capital supplement, mainly through profit retention; The other is exogenous, mainly including IPO, fixed increase, share allotment, convertible bonds and other refinancing methods, which can supplement the core tier 1 capital; Other capital supplement tools, such as tier 2 capital bonds and perpetual bonds, can supplement tier 1 capital.
From the "blood replenishment" of banks in 2021, refinancing is the most active. Shanghai securities information statistics show that listed banks raised about 143.1 billion yuan through IPO, fixed increase, share allotment and convertible bonds, accounting for 11%, 28%, 19% and 42% respectively. At the same time, it has been disclosed that the refinancing scale to be implemented in the plan also has 130 billion yuan, of which the issuance heat of convertible bonds has not decreased, the scale has reached 85 billion yuan, and the allotment financing has reached 23 billion yuan.
listed banks now prefer to issue convertible bonds for financing for no other reason - low issuance difficulty, low risk, good market window period and low issuance cost.
However, there are also shortcomings in the way of convertible bonds - capital can be replenished only after equity conversion. According to the statistics of market institutions, as of December 20, there were 14 existing convertible bonds of banks, with a balance of 212.2 billion yuan, accounting for 34% of the balance of convertible bonds in the whole market, far exceeding that of other industries.
"If you want to convert shares, you need better stock price performance, otherwise the process may be very long." China Merchants Securities Co.Ltd(600999) Liao Zhiming, chief banking analyst, explained that if the forced conversion of shares also needs to be supported by a significant rise in share prices.
This year, the rights issue also "reappeared in the Jianghu" after seven years of silence. This approach is an effective means to supplement core tier 1 capital for some banks with relatively low valuation. Last year, Bank Of Jiangsu Co.Ltd(600919) took the lead in issuing shares and successfully implemented it. The follow-up Bank Of Ningbo Co.Ltd(002142) has also been implemented, and Bank Of Qingdao Co.Ltd(002948) , China Zheshang Bank Co.Ltd(601916) are still on the road.
normalization of bond supplementary capital instruments
In addition to other tier 1 capital instruments, there is no doubt that tier 2 capital bonds and perpetual bonds have been issued normally.
According to Shanghai securities information statistics, since 2021, banks have issued 135 tier 2 capital bonds, with a scale of 1.24 trillion yuan; 62 perpetual bonds, with a scale of 639 billion yuan. After deducting the maturity scale of existing bonds, the net issuance is about 700 billion to 800 billion yuan.
The core advantage of tier 2 capital bonds lies in convenient issuance and low cost. In recent years, the number of issuance has continued to blowout and "big orders" have appeared frequently. On December 6, it was disclosed that the bank had been approved to publicly issue tier 2 capital bonds of no more than 190 billion yuan in the national inter-bank bond market.
Perpetual bonds refer to non fixed term bonds, which were officially opened in 2019 and are also very active in issuance. Over the past three years, the issuance of perpetual bonds has been basically flat, and the issuers are mainly small and medium-sized banks. Of course, large banks and joint-stock banks are also actively participating in it, and the issuance rhythm is fast. On December 8, China Merchants Bank Co.Ltd(600036) completed the issuance of 43 billion yuan of perpetual bonds, and the bond was approved for issuance on November 25.
There is also a special financing tool for small and medium-sized banks to replenish capital - local special bonds. The issuance scale this year is 159.4 billion yuan. The special bonds of local small and medium-sized banks were issued by the Ministry of finance last year, with a total amount of 200 billion yuan, which are targeted to support the resolution of risks of local small and medium-sized banks.
the pressure on core tier 1 capital is obvious
Since this year, commercial banks have maintained a rapid investment in assets, and there is an urgent need to replenish capital and enrich the "money bag".
In the past two years, due to the epidemic and other influencing factors, banks have limited ability to make up capital through profit retention. According to Wang Gang, an analyst at East Asia Qianhai securities, the year-on-year growth rate of total assets of commercial banks in October this year was 9.23%, an increase of 0.5 percentage points month on month. The investment speed of total assets accelerated, and the consumption of risk assets brought capital supplement pressure. The growth rate of RWA (risk weighted assets) continued to be faster than the year-on-year growth rate of net profit. Commercial banks supplemented endogenous capital pressure through retained earnings.
Respondents said that at present, the core tier one capital pressure faced by banks is obvious. According to the statistics of , by the end of September 2021, among the 41 A-share listed banks, the core tier 1 capital adequacy ratio of 25 banks had decreased compared with the end of last year; The core tier 1 capital adequacy ratio of 11 banks hovered at the warning value, and the core tier 1 capital adequacy ratios of Wuxi Rural Commercial Bank Co.Ltd(600908) , Bank Of Qingdao Co.Ltd(002948) , China Zheshang Bank Co.Ltd(601916) , Bank Of Chengdu Co.Ltd(601838) were 8.35%, 8.41%, 8.45% and 8.34% respectively.
"The core capital adequacy ratio of many banks is under pressure." Liao Zhiming believes that, especially this year, the Chinese version of TLAC (total loss absorption capacity) management measures was implemented, and the regulatory authorities released the list of China's systemically important banks. 19 banks are divided into five groups in the list, and each group has different additional capital requirements, which need to be met by core Tier-1 capital and put forward higher requirements for bank capital management. Therefore, The core tier one capital of these banks has certain pressure to increase.
This also explains the important reason why banks are active in refinancing. In the financing activities since November, systemically important banks have been quite active. The secondary capital bond market was originally the "main position" of small and medium-sized banks, but recently there have been large banks.
Liao Zhiming said that the issuance of debt capital supplement tools will be relatively large in the next few years, and the annual net issuance is expected to be about 900 billion yuan.
(Shanghai Securities News)
