Leading mainland banks were unlikely to resort to issuing new shares or debts to raise money this year, international rating agency Moody's predicted yesterday.
Christine Kuo, senior credit officer for financial institutions at Moody's, said the recent cut in dividend payments would save them from raising capital on a 'massive' scale.
The cut was initiated by state-controlled Central Huijin Investment, a major shareholder of major banks in China.
It announced that Bank of China, China Construction Bank and Industrial and Commercial Bank of China would cut dividends by 5 points to 35 per cent of 2011 profits, while maintaining the ratio at 35 per cent for Agricultural Bank of China.
'We see it as a more efficient way to address their capital needs,' Kuo said. 'The more money they retain, the less they will have to go out to the market.'
Beijing is allowing major lenders to increase new loans 5 per cent in the first quarter to help cash-strapped private businesses at home.
The market has interpreted this as a sign of reversing its credit tightening policy.