The first annual report of the six major banks, Bank of Communications' 14.6 billion dividend behind the "spread defense battle"

On the evening of March 21, Bank of Communications disclosed its 2024 annual report, becoming the first among the six major state-owned banks to release its annual report.

The annual report shows that Bank of Communications maintained considerable resilience in its performance. Despite a significant narrowing of interest margins across the industry, the bank's net interest margin only decreased by 1 basis point year-on-year, with excellent cost control. As a result, both the bank's operating income and net profit achieved positive growth.

In the same period as the annual report, Bank of Communications also announced a cash dividend of RMB 0.197 per share (tax included) to registered A-share and H-share shareholders, totaling a cash dividend of RMB 14.63 billion to all shareholders.

Performance Highlights Resilience

The annual report indicates that Bank of Communications' profit growth remains resilient. During the reporting period, the group achieved a net profit (attributable to shareholders of the parent company) of RMB 93.586 billion, a year-on-year increase of 0.93%; and net operating income of RMB 260.269 billion, a year-on-year increase of 0.87%.

However, the business scale showed steady growth.

At the end of the reporting period, the group's total assets amounted to RMB 14.90 trillion, an increase of 5.98% compared to the end of the previous year. Among them, the customer loan balance was RMB 8.56 trillion, an increase of RMB 598.037 billion compared to the end of the previous year, a growth rate of 7.52%; the customer deposit balance was RMB 8.80 trillion, an increase of RMB 249.12 billion compared to the end of the previous year, a growth rate of 2.91%.

Net Interest Margin Basically Stable

The annual report shows that during the reporting period, the group's net interest income increased by 3.48% year-on-year, with a net interest spread of 1.11%, down 3 basis points year-on-year, and a net interest yield of 1.27%, down 1 basis point year-on-year.

The narrowing of interest margins is a common pain point in the industry. Bank of Communications has effectively hedged the decline in asset-side returns through significant cost control on the liability side, stabilizing the overall operational situation.

For example, interest expenses on customer deposits amounted to RMB 178.111 billion, a year-on-year decrease of RMB 14.871 billion, a decline of 7.71%, accounting for 63.19% of total interest expenses.

Slight Decrease in Non-Performing Loan Ratio

Overall, the asset quality of Bank of Communications remains stable.

At the end of the reporting period, the group's non-performing loan ratio was 1.31%, a decrease of 0.02 percentage points compared to the end of the previous year; the provision coverage ratio was 201.94%, an increase of 6.73 percentage points compared to the end of the previous year.

Specifically, the industry still needs to pay attention to the relatively high non-performing loan ratios in the accommodation and catering industry and the real estate industry.

Dividend of 14.6 Billion

The annual report shows that according to the board's proposal on March 21, 2025, the bank plans to allocate RMB 7.892 billion to statutory surplus reserves and RMB 13.78 billion to general risk reserves in 2025; it plans to distribute a cash dividend of RMB 0.197 per share (tax included) to registered A-share and H-share shareholders based on a total share capital of 74.263 billion shares (with a par value of RMB 1 per share) as of December 31, 2024, totaling a cash dividend of RMB 14.63 billion to all shareholders The above proposal is subject to approval by the shareholders' meeting.

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