Low dividend hits Minsheng shares

PUBLISHED : Friday, 29 August, 2014, 11:57am
UPDATED : Friday, 29 August, 2014, 11:57am

China Minsheng Banking Corp’s net profit grew 11 per cent in the first half of the year but its share price fell on Friday morning as the bank more than halved its dividend.

Minsheng posted 25.5 billion yuan (HK$32.1 billion) in net profit in its interim earnings report, compared with 22.9 billion yuan the same period the year before, beating analysts’ expectations.

The impaired-loan ratio increased eight basis points to 0.93 per cent, at the low end of bad-loan figures of China’s small and medium-sized banks.

Despite the strong growth and low non-performing loans, Minsheng’s share price fell up to 3 per cent during morning trading in Hong Kong after the bank’s cash dividend to investors shrunk from a year earlier.

Minsheng, China’s first privately owned bank, said it would pay 75 fen for every 10 shares, down from the 1.58 yuan it paid a year ago.

“The dividend has declined but it makes their capital more enhanced,” said Chen Shujin, an analyst at DBS Vickers in Hong Kong.

Minsheng’s capital adequacy ratio climbed to 11.02 per cent by June from 10.69 per cent at the end of last year.

The dividend has declined but it makes their capital more enhanced
Chen Shujin, DBS Vickers analyst

Earlier this month, the bank said in a regulatory filing that board chairman Dong Wenbiao resigned “due to other business arrangement[s]”.

The filing did not expand on the factors surrounding the resignation of Dong, who had been with the bank since 1996. However, Chinese media reported that he had set up a private investment company while holding his position at Minsheng.

Analysts said the resignation would not affect the bank’s share price in the long run.