Key investment points
On February 11, the CBRC released the data of major regulatory indicators of commercial banks in 2021. On the whole, the non-performing rate of the industry decreased by 2bp month on month, and the non-performing margin of state-owned stock banks improved significantly; The industry net interest margin has continued to pick up since the second quarter, and the marginal improvement of rural commercial banks is the largest; The net profit of the industry increased by 12.6% year-on-year, the highest growth rate in the year and the highest since the end of 2014. (for details, please refer to our special report “data of banking industry in 2021: Q4 volume and price of the industry rise simultaneously, and the growth rate of net profit reaches the best in 2014”)
Amount: Net financing confirmation of interbank certificates of deposit. 1. Asset side: in the second week of February 2022, there was a high repayment of treasury bonds, with a total net redemption of 69.4 billion, an increase of 64.7 billion over the same period last year; The net financing of local bonds still maintained a rapid pace and increased. In the second week of February 2022, the net financing of local bonds was 73.8 billion, an increase of 78.5 billion over the same period last year. Due to the Spring Festival, the rhythm slowed down slightly compared with January 22; Net redemption of treasury bonds was 143.4 billion. In 2022, the issuance of local bonds responded to the guidance of the state to “move forward”, the amount of financing increased and the pace of issuance accelerated. At present, a total of 21 provinces and cities have disclosed the local bond issuance plan from January to March, with a total disclosure of 1232.4 billion yuan. 2. Liability side: in the second week of February, all interbank certificates of deposit were converted to net financing, the net financing of joint-stock banks and urban commercial banks exceeded 100 billion, and the net financing of state-owned banks and rural commercial banks was not weak. In the second week of February, the banking industry increased the financing of interbank certificates of deposit. Compared with the week before the Spring Festival, state-owned banks changed from net repayment to net financing of 9.1 billion, and the net financing amount of joint-stock banks reached 210.6 billion at most; Urban commercial banks still maintained a large amount of financing, with a net financing of 17.3 billion and rural commercial banks converted to a net financing of 28.4 billion.
Price: liquidity tightened slightly and term interest spread widened. 1. Asset side: in the second week of February, the open market operation tightened the investment of funds. This week is the first week after the Spring Festival. After the Spring Festival holiday, the reverse repurchase operation volume of the central bank returned to the level of 10 billion, with a net return of 800 billion funds. 2. Debt side: the interest rate of active debt basically maintained a downward trend. In addition to urban commercial banks, the capital cost of active liabilities of other types of banks decreased to varying degrees compared with that before the holiday.
Credit risk: in the first two weeks of February, there were 2 cases of credit debt default, and the industry was real estate development, agriculture, forestry, animal husbandry and fishery, with a total scale of 1.22 billion. Affected by the tight credit environment, the number of defaulted bonds of real estate enterprises showed a downward trend. Considering the marginal relaxation of the financing policy for real estate enterprises since January, and the current policy emphasizes that there is still room for monetary and fiscal policy under the expectation of “stable growth”, we judge that the current credit market risk will be significantly repaired compared with the previous period, and there is no large credit risk as a whole, but individual regions and enterprises will be exposed to individual risks.
Suggestions on sector investment: the safety margin of the sector is relatively high at present, and the asset quality constructs the safety margin of bank stocks. 1. The core investment logic of bank stocks is macroeconomic. For details, see our relevant in-depth report “how do bank stocks perform when prices rise? – summary and comparison of multiple rounds of performance of bank stocks in China and the United States”. We expect that the asset quality of listed banks will be stable in the next few years, which will build the safety margin of bank shares. 2. Banks have two main lines of stock selection. One is to choose banks that are undervalued, have safe asset quality and are expected to succeed in transformation. They are optimistic about Postal Savings Bank Of China Co.Ltd(601658) , Bank Of Jiangsu Co.Ltd(600919) , Bank Of Nanjing Co.Ltd(601009) and Industrial Bank Co.Ltd(601166) . The other is our long-term proposal to continue to embrace the core assets of banks: China Merchants Bank Co.Ltd(600036) , Bank Of Ningbo Co.Ltd(002142) , Ping An Bank Co.Ltd(000001) . Their performance is highly sustainable and scarce. The boom of high-quality banks is certain and long-term.
Risk warning event: the economic downturn exceeded expectations. The impact of the epidemic exceeded expectations.
