(Yicai Global) July 8 -- China’s listed banks are preparing to hand out a record CNY549.1 billion (USD81.9 billion) in dividends this year to boost investor confidence as their market valuation remains low.

State-owned banks are the most generous, with six biggest lenders planning to deal out around 70 percent of the total at CNY380 million (USD56.6 million), according to corporate information platform Wind, citing data from 40 out of China’s 42 listed banks that had released their plans as of yesterday. Industrial and Commercial Bank of China is giving out the most at CNY104.5 billion.

Twenty-two of these banks, most of which are urban and rural commercial lenders, have already distributed the dividends and eight will do so soon, according to Wind. The profit allocations of another 10 banks have been approved by shareholders but have yet to announce their respective payout date.

And it is not just the amount that is being doled out that is impressive, the dividend rate of many banks, which is the ratio of dividends per share to the purchase price of the stock, is much higher than current one-year deposit yields, according to Yicai Global calculations.

This year, 12 banks have a dividend rate of more than 5 percent, and 15 have a rate of between 3 percent and 5 percent. Bank of Communications, Bank of China and Agricultural Bank of China are the three most generous lenders with investment returns of 7.64 percent, 6.99 percent and 6.64 percent respectively.

Improving the proportion of cash dividends can help boost investor confidence in listed banks, a banker told Yicai Global. It is a way of showing investors the bank is performing well and its management has confidence in the future.

Under the current economic situation at home and abroad, investing in Bank of China with a dividend rate of 6.99 percent should be a stable and reliable choice for institutional investors, Liu Jin, president of BOC, said previously.

Most listed banks’ cash dividends amount to at least 20 percent of profits, according to Wind. Shanghai Rural and Commercial Bank is the most magnanimous, sharing 55.6 percent of profits with its stakeholders, amounting to CNY5.4 billion.

The market valuation of China’s listed banks is relatively low due to various factors. The price-to-book ratio, which is calculated by dividing a firm’s stock price with its book value per share, of 36 listed banks were below 1. The average P/B ratio of the banking sector was only 0.56 as of the end of June.

Editors: Tang Shihua, Kim Taylor