news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

Our reporter Ran Xuedong and trainee reporter Li Xiang report from Beijing

Recently, Dongguan Bank Co., Ltd. (hereinafter referred to as "Dongguan Bank") submitted its prospectus to the Shenzhen Stock Exchange again. This is the fourth time that Dongguan Bank has submitted its prospectus. Prior to this, Dongguan Bank's IPO was suspended because its financial information had expired.

As early as 2008, Dongguan Bank started its IPO journey, and the road to listing lasted for 16 years. Dongguan Bank has a relatively dispersed equity structure, with no controlling shareholder or actual controller. At the same time, the bank is also facing compliance risks and pressure from declining asset quality.

Regarding whether the dispersed equity structure will have an impact on the listing, Wang Pengbo, a senior financial analyst at Broadcom Consulting, said in an interview with the China Times on July 15 that for banks, in addition to the equity structure, they must also consider the bank's market acceptance, performance profit margins, development space, compliance and other aspects.

Dongguan Bank submits prospectus to Shenzhen Stock Exchange

Recently, Dongguan Bank submitted a prospectus to the Shenzhen Stock Exchange. This is the fourth time that Dongguan Bank has submitted a prospectus since November 2019. On March 31, the bank's IPO was suspended due to expired financial information.

Currently, the listing of banks is full of thorns, but small and medium-sized banks still want to raise funds and enhance their market competitiveness through listing. Dongguan Bank is no exception. The road to listing is bumpy and the IPO road has been a long run for 16 years.

In 2008, Dongguan Bank started its IPO journey. In 2012, Dongguan Bank was included in the list of companies that applied for initial public offering by the China Securities Regulatory Commission. In 2014, the bank was terminated for failure to complete pre-disclosure. When the full registration system is officially implemented in 2023, Dongguan Bank will switch to the registration system.

Wang Pengbo said that since small and medium-sized banks have relatively narrow and limited channels for obtaining funds, banks can solve their funding needs during the development process by raising funds through listing, and some shareholders can also benefit.

An Guangyong, an expert from the Credit Management Committee of the All-China Mergers and Acquisitions Association, said in an interview with the China Times on July 15 that going public is an important way for banks to enhance their capital strength. By raising funds through issuing stocks, banks can replenish their capital and improve their ability to resist risks. At the same time, the public and investors will have a higher level of awareness of the listed banks, which will help attract more customers and business opportunities.

An Guangyong added that listing can optimize the bank's governance structure and improve corporate governance, transparency and management efficiency.

According to Dongguan Bank's prospectus, in 2023, the bank will achieve operating income of 10.587 billion yuan, a year-on-year increase of 3.0%; and achieve net profit attributable to shareholders of 4.067 billion yuan, a year-on-year increase of 6.06%.

As of the end of 2023, Dongguan Bank's total assets were 628.925 billion yuan, a year-on-year increase of 16.81%; during the same period, Dongguan Bank issued loans and advances of 327.727 billion yuan, a year-on-year increase of 12.84%.

Looking back at Dongguan Bank's past data, the bank's performance has grown year by year. From 2020 to 2022, the bank achieved operating income of 9.158 billion yuan, 9.511 billion yuan and 10.279 billion yuan, and net profits of 2.876 billion yuan, 3.320 billion yuan and 3.833 billion yuan.

In recent years, the net interest margin of small and medium-sized banks has continued to narrow, and Dongguan Bank's net interest margin and net profit margin have both shown a downward trend. From 2021 to 2023, Dongguan Bank's net interest margin in each reporting period was 1.79%, 1.67%, and 1.61%, and its net profit margin was 1.82%, 1.72%, and 1.63%, respectively.

It is worth noting that Dongguan Bank's net interest margin and net profit margin in 2023 are lower than the average of similar comparable listed banks. The bank said that this is mainly due to the decline in loan yields in 2023.

Facing downward pressure on asset quality

Dongguan Bank has a relatively dispersed equity structure. According to the prospectus, the bank has no controlling shareholder or actual controller. As of the date of signing of the prospectus, the only shareholder directly holding more than 5% of the shares is the Dongguan Municipal Finance Bureau.

Wang Pengbo said that the advantage of companies with actual controllers is that they can make decisions more efficiently and better grasp market opportunities in the early stages of entrepreneurship, while institutions without actual controllers are more suitable for stabilizing the market, making decisions more democratically and objectively. Dispersed equity makes it easier to protect the rights and interests of small and medium shareholders, but it may also increase operating and decision-making costs.

Regarding whether the dispersed equity structure will have an impact on the listing, Wang Pengbo said that for a bank's listing, not only the equity structure should be considered, but also the bank's market acceptance, performance profit margin, development space, compliance and other aspects should be comprehensively considered.

Dongguan Bank also has some compliance risks. According to the prospectus, from 2021 to 2023, the bank will have 1,204, 1,552 and 3,318 lawsuits, with the principal of the lawsuits being 1.992 billion yuan, 2.410 billion yuan and 2.717 billion yuan respectively.

At the same time, Dongguan Bank is also facing downward pressure on asset quality. According to the prospectus, as of the end of 2023, Dongguan Bank's total loans and advances amounted to 328 billion yuan, accounting for 51.02% of its total assets. The credit risk related to the loan business, that is, the risk of counterparty default, has also become the main credit risk faced by Dongguan Bank.

The bank's non-performing loan balance has shown an increasing trend year by year. As of the end of 2023, Dongguan Bank's non-performing loan ratio was 0.93%. From 2021 to 2023, the bank's non-performing loan balance was 2.594 billion yuan, 2.715 billion yuan and 3.046 billion yuan, respectively.

In its prospectus, Dongguan Bank stated that if the bank's credit risk management fails to meet expectations, it may lead to a decline in the overall quality of its loan portfolio and an increase in the scale of non-performing loans, which will have an adverse impact on Dongguan Bank's financial condition and operating performance.

Public information shows that Dongguan Bank is a joint-stock commercial bank registered with the Guangdong Provincial Administration for Industry and Commerce on September 23, 1999 with the approval of the People's Bank of China. Dongguan Bank's business is mainly concentrated in the Dongguan area, covering major cities in Guangdong Province and parts of Anhui, Hunan and the Hong Kong Special Administrative Region. As of the end of 2023, the bank has a head office business department, 13 branches, 63 first-level branches, 95 second-level branches, 3 community branches, 4 small and micro branches, and has initiated the establishment of 6 village banks and 1 Hong Kong subsidiary to be opened, and has a stake in Xingtai Bank in Hebei Province.

Editor-in-charge: Meng Junlian Chief Editor: Zhang Zhiwei