Ping An Bank executives showcase full confidence in China's real estate sector

Senior executives of Ping An Bank cast a vote of confidence in the improvement of China's real estate sector on Friday, saying the recent moves by the central government will promote stable and healthy development of the industry.

"The central government has taken moves to support the real estate industry and we have already seen that market confidence is growing. Measures such as the establishment of a real estate financing coordination mechanism have produced positive effects," Ji Guangheng, president of Shenzhen-based Ping An Bank, said.

"When expectation changes, it needs time for the market to react. So there will be a process (before we can see the turnaround of the situation)," he said at the bank's annual results announcement in Shenzhen.

Ji said the bank is currently not under "systematic stress" regarding the defaults risks of the property industry, as "we have internal stress tests and related measures to cope with them".

Moreover, collateral rate, which refers to the ratio of loans to the value of collateral, of the bank is relatively low and property projects related to the bank are mainly in developed regions like the first-tier cities, he added.

Wu Leiming, proposed president assistant and chief risk officer of Ping An Bank, said the bank has long been in partnership with property developer Vanke and the cooperation has focused on quality projects and in key regions.

Vanke has recently been under the spotlight due to its debt risks. It is reported that a group of commercial banks are raising money in loans to assist its repayment of maturing bonds.

"The overall risk in our cooperation remains manageable," Wu said.

The operating revenue of Ping An Bank dropped 8.4 percent year-on-year to 164.69 billion yuan ($22.88 billion) in 2023. The Shenzhen-based lender achieved 46.46 billion yuan in net profit, up 2.1 percent from a year earlier.

The bank announced a cash dividend of 7.19 yuan per 10 shares for the year. Its dividend payout ratio -- the total amount of dividends paid out to shareholders relative to its net income -- is expected to rise remarkably to 30 percent in 2023 from 12 percent in 2022.

Explaining the reasons behind the increase, Ji said the company has been willing to raise the dividend ratio over the past years, but the ratio was not high because the profits were mainly used to replenish capital.

"We have seen improvement in the bank's capital adequacy ratio in 2023, so we increased the ratio to 30 percent," he said, adding that the bank will actively optimize the rate of return and strive to create more value for investors.

The stock price of Ping An Bank closed 3.62 percent higher to end at 10.6 yuan on Friday.