March 12, 2018 / 10:20 AM / 5 months ago

China's AgBank to raise up to $15.8 bln via A-share private placement

BEIJING, March 12 (Reuters) - Agricultural Bank of China (AgBank) , the country’s third-largest lender, said on Monday it has received board approval to raise as much as 100 billion yuan ($15.81 billion) through a private placement of its A shares.

The proceeds will be fully used to replenish the common equity tier 1 capital and boost capital adequacy of the bank, AgBank said in a securities filing.

Central Huijin Investment Co, the Ministry of Finance, China National Tobacco Corp, Shanghai Haiyan Investment Management Co, Zhongwei Capital, China National Tobacco Corporation Hubei Province Co and NCI will be the subscribers to the private placement shares, the bank said.

The move comes as China’s large state lenders step up efforts to speed up write-offs and boost bad loan buffers as non-performing loans (NPLs) in the commercial banking industry hit 12-year highs

In recent weeks, China’s financial regulators have come up with a series of rules to broaden banks’ capital tools and relax loan provisioning requirements in a bid to allow lenders greater space to expedite the disposal of NPLs and move off-the-balance sheet business onto their loan books.

State-owned investment company Central Huijin has proposed to invest 40.03 billion yuan in AgBank, accounting for 40 percent of the private placement plan, while the finance ministry proposed to invest 39.21 billion yuan, according to the filing.

After the private placement, AgBank’s core tier 1 capital adequacy ratio will increase to 11.23 percent from 10.38 percent and its tier 1 capital adequacy will increase to 11.90 percent from 11.06 percent

In a separate filing for preliminary annual results, AgBank reported a 4.90 percent rise in net profit to 192.96 billion yuan for 2017, while its non-performing loan ratio declined to 1.81 percent from 2.37 percent a year earlier.

Net interest margins stabilized at 2.28 percent in 2017, representing an increase of 0.03 percentage points from 2016, the filing showed.

Basic earnings per share increased to 0.58 yuan in 2017 from 0.55 yuan a year earlier. ($1 = 6.3233 Chinese yuan renminbi) (Reporting By Shu Zhang and Matthew Miller Editing by Muralikumar Anantharaman)

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