At its 2025 annual general meeting of shareholders held last week, Bank Of Zhengzhou Co.,Ltd. (ASX: 002936), chaired by Chairman Zhao Fei, saw 12 proposals passed through a combination of on-site and online voting.

While all proposals faced some level of opposition, the one concerning the bank's 2025 profit distribution plan drew particularly significant dissent from shareholders.

Specifically, 96.67% of A-share holders voted in favor, with 3.08% opposed. Among H-share holders, the approval rate was higher at 98.66%, with 1.33% voting against.

Separate voting results for small and medium-sized A-share investors showed a 94.04% approval rate for the profit distribution plan, with 5.52% opposed, marking the highest proportion of opposition among investor groups.

The approved profit distribution plan stipulates no cash dividend payment, no bonus share issuance, and no capital reserve conversion into shares.

Regarding the allocation of retained profits, the bank's audited 2025 net profit attributable to the parent company was RMB 1.88 billion. After deducting RMB 480 million in interest paid on perpetual capital bonds in November 2025, the profit available for distribution to ordinary shareholders was RMB 1.4 billion.

The distribution plan allocates 10% of the net profit, or RMB 188 million, to statutory surplus reserves. A further RMB 707 million is allocated to general risk provisions, with the remaining undistributed profit carried forward to the next fiscal year.

Consequently, Bank Of Zhengzhou Co.,Ltd. becomes the only bank among the 42 A-share listed banks not to pay a dividend for the 2025 fiscal year.

This move is consistent with the bank's recent history, as it has rarely distributed cash dividends in past years. The sole exception was in 2024, when it paid a cash dividend of RMB 182 million, representing a payout ratio of 9.69%, which was the lowest among A-share listed banks.

Focus on Capital Strength

Rather than prioritizing substantial shareholder payouts, the bank is focused on bolstering its capital base and enhancing its risk resilience. Its core tier-1 capital adequacy ratio has declined for five consecutive years, falling from 9.49% in 2021 to 8.30% by the end of the first quarter of 2026, indicating significant pressure from capital consumption.

This cautious approach persists even as the bank returned to growth in both revenue and net profit. For the first quarter of 2026, it reported operating revenue of RMB 3.521 billion, a year-on-year increase of 1.31%, and net profit attributable to the parent company of RMB 1.070 billion, up 5.37% year-on-year, indicating continued improvement in profitability.

Capital Expenditure Priorities

Instead of distributing profits to shareholders, the bank intends to channel funds into business operations. Its approved capital expenditure budget for 2026 totals RMB 781 million.

A significant portion, RMB 337 million, is allocated to construction-in-progress, including the development of a financial service center and a comprehensive business office building. An additional RMB 50.49 million is budgeted for engineering and renovation projects, covering branch relocations, original site refurbishments, and other routine upgrades.

Furthermore, the budget includes RMB 26.35 million for fixed asset investments and RMB 366 million for technology-related projects.