Does the US interest rate hike have an impact on banks?
Bank Of China Limited(601988) overseas business accounts for a relatively low proportion. The US interest rate increase mainly affects the business development of China's import and export enterprises, and then indirectly affects the banks that have business dealings with relevant enterprises. However, under the epidemic, China has given full play to its manufacturing advantages and strong import and export trade, which is difficult to be replaced in a short time. At the same time, China's policy assistance to small and medium-sized enterprises can also mitigate the impact of external export fluctuations. Therefore, the US interest rate hike has little impact on Bank Of China Limited(601988) in the short term. In addition, the linkage between Bank Of China Limited(601988) balance sheet and US interest rate hike is not great.
When will the credit environment continue?
Judging from the current pressure on economic growth, credit relief is in the ascendant. First of all, in the current context of maintaining the basic stability of macro leverage ratio, it is necessary to maintain the basic matching between money supply and social financing scale and economic growth. This means that the total amount of money and credit should grow steadily and the overall credit expansion should be moderate. Secondly, it is expected that under the influence of the US interest rate hike in the first half of the year, China's monetary policy will move ahead. The credit environment of the whole year is expected to show a rhythm of loosening before and stabilizing after. Therefore, the wide credit environment was relatively certain in the first half of the year.
How is the real estate loan now?
With the support of policy guidance, the balance of real estate loans at the end of the fourth quarter of 2021 increased by 7.9% year-on-year, 0.3pct higher than that at the end of the third quarter, and the downward trend has been preliminarily improved. Combined with the social finance data in December, we can judge the strength of public real estate development loans, and the policy correction effect began to appear. At the same time, the five-year LPR is lowered to promote the decline of housing loan interest rate, which can better boost the normal purchase demand of residents, promote the recovery of commercial housing sales, and the growth of personal housing loans is expected to improve. What do you think of the recent banking market?
Since the end of December 2021, the bank market has performed satisfactorily and showed strong sustainability, and the larger market has obviously run out of excess returns. As of January 26, 2022, the bank's Pb (MRQ) was 0.57x, not only at an absolute low in the past five years, but also at the bottom of all sectors. The dividend yield of the banking sector reached 4.6% in the past 12 months, ranking first in all sectors. Undervalued value plus high dividend yield has become more and more attractive to long-term funds. Recently, domestic and foreign-funded institutions have increased the allocation of the banking sector.
Investment suggestion: we judge that the overall liquidity environment in 2022 will be stable and structurally broad. Continue to recommend 1) retail banks with better development of asset management business, mainly in a wide credit environment. This kind of bank asset management business is expected to achieve leapfrog development; 2) For banks suppressed by real estate credit risk in the early stage, under the policy correction, the valuation repair can be expected. Individual stock recommendations Postal Savings Bank Of China Co.Ltd(601658) , China Merchants Bank Co.Ltd(600036) , Bank Of Ningbo Co.Ltd(002142) , Industrial Bank Co.Ltd(601166) , Bank Of Chengdu Co.Ltd(601838) , Wuxi Rural Commercial Bank Co.Ltd(600908) .
Risk tip: the epidemic situation is repeated, the economic downturn exceeds expectations, the asset quality fluctuates, and the introduction of policies exceeds expectations
