Minority shareholders cast over 10% opposing votes; Sunong Bank faces scrutiny in the "high dividend era"

On May 28, Sunong Bank held its 2025 annual shareholders' meeting. A proposal regarding the shareholder return plan for the next three years unexpectedly became the focal point of controversy.

According to the resolution announcement, when reviewing the "Proposal on the 2026-2028 Shareholder Return Plan of Jiangsu Suzhou Rural Commercial Bank Co., Ltd.", the percentage of shares voting against the proposal accounted for 10.33% of the total valid voting shares present at the meeting. Although the proposal was ultimately passed, this level of opposition is rare in shareholders' meetings of listed banks.

What is more noteworthy is that almost all opposing voices came from minority shareholders.

The shares casting votes against the proposal were all from shareholders holding less than 5%. Among the participating minority shareholders, the proportion of opposing votes was close to 40%. This means that, despite support from major shareholders ensuring the proposal’s passage, many minority investors have expressed clear dissatisfaction with the bank’s future dividend arrangements.

The core of the controversy points to the minimum cash dividend threshold over the next three years.

According to the 2026-2028 Shareholder Return Plan, on the premise of meeting capital regulatory requirements and ongoing operational needs, Sunong Bank will distribute no less than 10% of the distributable profits of each year in cash for each of the next three years.

From an institutional design perspective, this arrangement does not violate regulations. Supervision does not mandate that commercial banks must pay cash dividends according to a fixed ratio. Banks generally adjust dividend policies dynamically based on capital adequacy levels, business plans, and risk circumstances.

However, against the backdrop of changes in the logic of bank stock investment, the statement of "no less than 10%" has nevertheless struck a nerve in the market.

In recent years, as the risk-free interest rate has continued to decline, high dividends have gradually become an important valuation support for the banking sector. Large state-owned banks generally maintain a payout ratio of over 30%, and many high-quality city commercial banks and rural commercial banks also regard stable dividends as a key attraction for long-term funds. In 2025, the total cash dividend for A-share listed banks hit a new historical high, with 13 banks having a payout ratio exceeding 30%.

In contrast, a minimum dividend commitment of 10% appears relatively conservative.

In fact, from a historical execution perspective, Sunong Bank is not a low-dividend bank.

In 2025, the bank carried out two profit distributions, interim and annual, totaling 2.1 yuan in cash per 10 shares and issued 1 bonus share per 10 shares. Based on year-end profits, its cash dividend ratio remained above 25%.

Precisely because of this, many investors are concerned about another matter—the possibility that the dividend policy may be lowered in the next three years.

For banks, reserving more room for retained profits is not without factual basis.

Currently, the banking industry faces the pressure of continuously narrowing net interest margins. Data from the National Financial Regulatory Administration shows that in the first quarter of 2026, commercial banks' net interest margin fell to a historic low of 1.40%. Meanwhile, commercial banks' capital adequacy ratio, tier 1 capital adequacy ratio, and core tier 1 capital adequacy ratio have all declined compared to the end of 2025.

In such an environment, retained profits remain one of the most important and lowest-cost channels for small and mid-sized banks to supplement core tier 1 capital.

For regional banks, this pressure is particularly pronounced. On the one hand, they must continue to support the local real economy and credit issuance; on the other, they face constraints such as slowing profit growth and limited channels for capital replenishment. Balancing capital safety and shareholder returns is becoming a common issue faced by increasing numbers of small and mid-sized banks.

Therefore, from the perspective of management, setting the minimum cash dividend ratio at 10% for the next three years is more like a risk buffer than an actual dividend guide. From the perspective of investors, in a context where bank stocks are increasingly seen as high-dividend assets, any signal that might undermine the certainty of future dividends could trigger market concerns.

To some extent, this vote reflects not only Sunong Bank’s dividend controversy, but also a new issue facing the entire banking industry—

When the need for capital supplementation and demands for high dividends exist simultaneously, should banks reserve more profits for the future or reward current shareholders more?

Finding a new balance among capital replenishment, business development, and shareholder returns may become a question that the bank will have to continue answering for the next three years.

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