<p>Last year, the central government injected 520 billion yuan (RMB, the same below) into four state-owned banks, according to domestic media reports. The Ministry of Finance has restarted the injection, targeting the remaining two state-owned banks, Industrial and Commercial Bank of China (ICBC) (1398) and Agricultural Bank of China (ABC) (1288). However, some domestic media quoted relevant personnel from the two banks stating that they have not yet heard any news about a new round of capital injection.</p>
<p>At the end of March last year, Bank of China (3988), China Construction Bank (939), Bank of Communications (3328), and Postal Savings Bank of China (1658) simultaneously issued shares to the Ministry of Finance and other national capital, raising a total of 520 billion yuan to replenish their core tier one capital.</p>
<p><strong>Related News:</strong> Four state-owned domestic banks raised 520 billion yuan through capital injection from the central government to replenish core tier one capital, marking a large-scale injection after 15 years.</p>
<h2>Analysis: ICBC and ABC Will Eventually Receive Capital Injection, Timing Uncertain</h2>
<p>Domestic media quoted an analyst from a listed bank stating that since ICBC and ABC were not included in the capital injection list at that time, they have a chance to receive state capital injection this year. &#34;According to regulatory statements for 2024, the six major banks will replenish their core tier one capital in batches. As the largest and strongest banks, ICBC and ABC are likely to receive financial injections this year or next, but the specific timing is difficult to determine.&#34;</p>
<p>Li Yunzhe, director of the National Financial Regulatory Administration, stated in September 2024 that efforts will be made to enhance the core tier one capital of the six major commercial banks, with a coordinated and orderly implementation in phases.</p>
<p>Liu Feipeng, a researcher at Postal Savings Bank, believes that under the emphasis on boosting domestic demand, banks still need to replenish capital. However, according to procedures, matters such as issuing special national bonds still need to be reviewed and approved during the Two Sessions.</p>
<h2>Goldman Sachs: New Capital Helps Maintain Growth and Dividend Distribution</h2>
<p>Goldman Sachs believes that if the two banks receive capital injections, they will face a dilution of earnings per share of 4% to 7%, with the expected dilution of net asset value per share being up to 2%, while the core tier one capital ratio may increase by 54 to 61 basis points. The bank also indicated that new capital generally helps banks maintain growth and dividend distribution. Once the capital injection is implemented, large banks will be more effectively able to meet the credit growth demands brought about by economic recovery, and may increase dividends. The dividend payout ratio for ICBC and ABC may increase by about 1.2 to 2.3 percentage points to maintain the same dividend per share</p>

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01288

IDCBY

ACGBY

<p>The Ministry of Finance plans to inject capital into ICBC and ABC to replenish core Tier 1 capital. Goldman Sachs expects this move could lead to a 4% to 7% dilution in earnings per share, but it will also enhance the banks' capital ratios. Analysts believe that the injection will help the banks maintain growth and dividends, with expectations that the dividend payout ratios for ICBC and ABC will increase by 1.2 to 2.3 percentage points</p>

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ICBC

INDUSTRIAL & COMMERCIAL BK OF CHINA UNSP ADR EACH REPR 20 ORD SHS

Agricultural Bank of China

ICBC and ABC are reported to receive central government capital injection. Goldman Sachs expects a maximum reduction of 7% in earnings per share, or will try to maintain dividends