This is the first bank whose IPO of A-Shares has been rejected.
On April 14, according to the official website of the CSRC, Jiangsu Dafeng Rural Commercial Bank Co., Ltd. (initial) failed to pass.
Statistics show that Dafeng rural commercial bank is a district and county-level rural commercial bank, which was established on November 26, 2011 and restructured from rural credit cooperatives.
Dafeng rural commercial bank submitted the listing materials as early as 2017 and changed to the status of “pre disclosure and update” in April 2018. Then there was no progress until the initial meeting on April 14 this year, which was only one step away from listing.
As for the specific reasons for not having a meeting, we may be able to find out from the inquiry of the IEC meeting.
The announcement of the audit results shows that the meeting of the development and Examination Committee of the CSRC raised ten questions for Dafeng rural commercial bank, mainly involving risk factors, asset quality, profitability, relationship with the provincial Associated Press, related party transactions and so on.
Dafeng agribusiness is a regional agribusiness firm, and its customers are mainly concentrated in Dafeng District, Yancheng City, Jiangsu Province.
The prospectus shows that although the bank is the commercial bank with the largest number of business outlets and the widest coverage in Dafeng area, its business development is also restricted by the macroeconomic and financial environment in Dafeng area.
The CSRC requires Dafeng rural commercial bank to explain whether it has a more comprehensive competitiveness in combination with the regulatory policies of rural commercial bank’s cross regional exhibition industry and the trend of regional economic development.
The listing of district and county-level agricultural commercial banks is not without precedent. In 2016, Wujiang rural commercial bank was listed in Shanghai, renamed Sunong commercial bank in 2019, and expanded its base from Wujiang District of Suzhou to Suzhou urban area, realizing scale expansion. In June 2021, Zhejiang Shaoxing Ruifeng Rural Commercial Bank Co.Ltd(601528) was listed, becoming the first listed agricultural commercial bank in Zhejiang, and its main business area is Keqiao District, Shaoxing City.
Profitability is also focused. As the net interest margin and net interest yield of Dafeng rural commercial bank are lower than the average level of comparable companies in the same industry, the CSRC requires Dafeng rural commercial bank to explain how to maintain sustainable profitability under the continuous downward trend of China’s interest rate.
According to the annual report, in 2021, Dafeng rural commercial bank realized an operating revenue of 1.333 billion yuan, a year-on-year increase of 5.87%, and a net profit of 573 million yuan, a year-on-year increase of 12.33%. By the end of 2021, the asset scale was 53.975 billion yuan, an increase of 1.98% over the end of the previous year.
The impact of covid-19 epidemic and other external factors on the quality of bank assets has also attracted attention. The CSRC requires to explain the migration of various loans and whether the provision for loan impairment is sufficient. There are also reasons why the loan balance of some group customers exceeds the total credit, and whether the relevant internal control systems are effectively implemented.
The annual report shows that by the end of 2021, the non-performing loan ratio of Dafeng rural commercial bank was 1.07%, down 0.03 percentage points from the beginning of the year.
In addition, Dafeng rural commercial bank is supervised by Jiangsu Association, and the core system is developed, constructed, operated and managed by Jiangsu Association.
In this regard, the CSRC asked Dafeng rural commercial bank to explain whether the provincial association affects the independence of the issuer and the fairness of information disclosure, as well as the investment and other capital exchanges with the Provincial Association, the relationship between creditor’s rights and debts, and whether there is any allocation of management fees.
The CSRC also requires Dafeng rural commercial bank to explain the decision-making procedures, pricing mechanism and disclosure of related party transactions, whether it involves the occupation of funds by related parties, and whether the issuer’s operating income or net profit is significantly dependent on related parties.
Among the top ten shareholders of Dafeng agricultural commercial bank, Hongdou Group finance company, Jiangsu Huifeng Bio Agriculture Co.Ltd(002496) (securities referred to as ” Jiangsu Huifeng Bio Agriculture Co.Ltd(002496) “), Guangming Food and other well-known companies are listed.
However, the capital adequacy ratio of Dafeng rural commercial bank has declined. By the end of 2021, the bank’s capital adequacy ratio was 14.75%, tier 1 capital adequacy ratio was 13.6%, and core tier 1 capital adequacy ratio was 13.6%, down from the previous year.
It is worth noting that there is no bank listing of A-Shares this year. In addition to Dafeng rural commercial bank, there are 10 banks in the IPO queue, specifically: Chongqing Three Gorges bank, Guangdong Nanhai rural commercial bank, Huzhou bank, Bank of Guangzhou, Guangdong Shunde rural commercial bank, Dongguan bank, Bozhou Yaodu rural commercial bank, Anhui Ma’anshan rural commercial bank, jiangsukunshan rural commercial bank and Jiangsu Hai’an rural commercial bank, which are in the state of “pre disclosure and update”.
