Bank of Ningbo(SZ:002142) Zhong Guo Jing Ying Bao·2025-10-20 11:43Core Viewpoint - Ningbo Bank plans to fully redeem 100 million shares of non-publicly issued preferred stock, amounting to RMB 10 billion, reflecting a broader trend among banks to adjust or redeem high-yield preferred stocks amid narrowing net interest margins and increasing profitability pressures [1][2][3] Group 1: Redemption of High-Yield Preferred Stocks - Ningbo Bank's preferred stock redemption is set for November 7, 2025, with a face value of RMB 100 per share and a coupon rate adjustment from 5.30% to 4.50% starting November 7, 2023 [2] - Other banks, including Industrial and Commercial Bank of China, are also redeeming high-yield preferred stocks issued before 2020, which typically have interest rates above 4% [2][3] - The trend indicates banks are replacing high-yield capital tools with lower-cost options to optimize their capital structure and reduce funding costs [3][4] Group 2: Market Conditions and Capital Tool Replacement - The banking sector is experiencing continuous pressure on net interest margins, prompting banks to seek lower-cost capital tools such as perpetual bonds and secondary capital bonds [6][7] - The average dividend yield of previously issued preferred stocks is around 5.04%, significantly higher than that of perpetual bonds, highlighting the need for banks to adjust their capital strategies [4][6] - The current market environment, characterized by ample liquidity and narrow credit spreads, is favorable for banks to issue new capital tools at lower costs [6][7] Group 3: Investor Sentiment and Regulatory Considerations - Investor risk preferences have become more differentiated, with a higher demand for returns from smaller banks and increased scrutiny on structural terms of new capital instruments [7] - Banks must balance innovation in capital tools with maintaining investor confidence, particularly in light of recent credit events affecting certain banks [7]