Summary of Key Points
At the annual general meetings of several listed banks recently (such as Sunong Bank, Hangzhou Bank, Wuxi Bank, and Xi'an Bank), proposals regarding dividend distributions and executive salaries faced a high proportion of opposition or abstentions. This change reflects a shift in investors' focus from "scale expansion" to "shareholder returns and corporate governance" as the banking industry enters a period of "low growth and low interest rate spreads." Questions such as whether dividends are sufficient and whether salaries are reasonable have become key indicators for assessing bank value. Bank shareholders' meetings have evolved from mere procedural events to important platforms for investors to express their genuine opinions.
Detailed Analysis
1. Insufficient Dividends: Small and Medium-Sized Shareholders "Voting with Their Feet"
Many banks' dividend ratios are far below the industry average, which has dissatisfied small and medium-sized shareholders.
- Example of Sunong Bank: The 2025 dividend rate was only 20.75% (most listed banks have rates around 30%), and the opposition from small and medium-sized shareholders reached 14.8%. The bank explained that it needed to retain profits to replenish capital, but this did not convince them. With low deposit interest rates, investing in bank stocks is intended to generate income through dividends; therefore, low dividends mean no return on investment.
- Special Case of Xi'an Bank: The largest foreign shareholder, BMO Financial Corporation of Canada, abstained from voting with 800 million shares (accounting for nearly 30%), indicating a stance of "neither opposition nor support." This was because Xi'an Bank's dividends have been below 18% for three consecutive years. By abstaining, the foreign shareholder expressed clear dissatisfaction with the dividend plan without directly breaking off cooperation.
In simple terms, banks used to attract investors through growth; now that growth has slowed down, dividends have become the primary source of income for investors, making them highly intolerant of low payouts.
2. Executive Salaries: Either "Inverted" or "Disconnected from Performance"
The controversy around executive salaries is not about the amount of money paid but about its fairness:
- Salary Inversion: The chairman of Hangzhou Bank earns an annual salary of 760,000 yuan (appointed by the organization and subject to a salary cap), while the president earns 2.53 million yuan (hired through market-based processes), and vice presidents also earn over 2.4 million yuan—this situation where senior management's salaries are lower than those of their subordinates raises concerns about the incentive mechanism.
- Performance Disparity: The salary of the Wuxi Bank president increased by 20%, but the bank's revenue only increased by 1.98% and profits by 2.53% (both less than 3%), with the net interest rate spread continuing to decline. Shareholders questioned, "Performance hasn't improved much, so why such a significant salary increase?"
The issue lies in the contradiction between the two systems of executive compensation: while managers appointed by the organization are subject to salary caps, those hired through market mechanisms receive higher salaries. A large gap or disconnect between these two systems leads to shareholder dissatisfaction.
3. Abstentions by Foreign Shareholders: A Significant Signal
The abstentions at Xi'an Bank were not from small and medium-sized shareholders but from BMO Financial Corporation of Canada. This is different from direct opposition by those shareholders, as foreign investors place more emphasis on "shareholder returns" (high dividends are a core attraction for bank stocks in international markets) and do not accept the rationale for retaining profits to replenish capital. By abstaining rather than opposing outright, they aim to maintain a long-term cooperative relationship while clearly signaling dissatisfaction with the plan.
This highlights that the opinions of foreign shareholders cannot be ignored. In the context of increasing globalization, dividend distributions and corporate governance must align with international investors' expectations.
4. Shareholders' Meetings Becoming Platforms for Expression: Corporate Governance Entering a New Phase
In the past, bank shareholders' meetings almost always saw unanimous approval; now, there are more oppositions and abstentions, reflecting changes in the industry and market:
- Industry Changes: Banks have moved from periods of rapid growth to ones of low growth and low interest rate spreads, meaning that the benefits of scale expansion have diminished. Investors rely on dividends and proper governance to secure returns.
- Changes in Investors: Small and medium-sized shareholders are more aware of their rights (actively participating in online voting), and institutional and foreign investors are more professional and sensitive to details of corporate governance.
In the future, banks cannot simply meet regulatory requirements; they must find a balance between retaining funds for development and distributing profits to shareholders. Compensation mechanisms need to be more transparent and linked to performance; otherwise, shareholder dissatisfaction will continue to rise.
5. What Should Banks Do?
- Dividends: Banks should not focus solely on replenishing capital but also consider shareholder returns (e.g., by setting a reasonable minimum dividend rate) to provide investors with a sense of long-term stability.
- Salaries: Reduce internal disparities in compensation and link salaries more closely to performance (e.g., tying executive salaries to profit growth and net interest rate spreads) while increasing transparency.
- Governance: Strengthen communication with shareholders, such as by explaining the logic behind dividend and salary plans in advance, to help them understand bank decisions and reduce misunderstandings.
In summary, these changes in bank shareholders' meetings indicate the maturity of the capital market and compel banks to improve their governance. After all, investors are voting with their money, and banks must deliver results that satisfy them.