On February 11, the CBRC released the main regulatory indicators of the banking industry for the fourth quarter of 2021. The annual net profit of commercial banks increased by 12.6% year-on-year, the average capital profit margin was 9.64%, and the non-performing loan ratio decreased to 1.73%.
The annual net profit of commercial banks increased by 12.6% year-on-year, and the profit growth increased quarter by quarter. In 2021, the net profit of commercial banks increased by 12.6% year-on-year, 1.2pct higher than that of 1-3q21. Since the beginning of the year, the profit growth rate has increased quarter by quarter. It is expected that revenue growth support and provision provision return to normalization as the main contributing factors. In terms of branches, the profit growth rate of state-owned banks maintained a high level (12.7% year-on-year for state-owned banks and 13.4% year-on-year for joint-stock banks), and the profit growth rate of urban commercial banks increased most significantly (quarter on quarter ratio + 11.2pct).
Credit supply maintained a high outlook, the net interest margin increased by 1bp quarter on quarter, and the "volume increase and price stability" boosted the contribution of interest income. In 2021, commercial banks maintained a high rate of table expansion, with a year-on-year growth rate of 8.6% in total assets at the end of 4q and a quarter on quarter increase of 0.3pct; Under the background of increasing downward pressure on the economy, 4q credit still maintained a high momentum, and state-owned banks played the "head goose effect". The credit increment in 2022 is expected to be roughly equal to or slightly higher than that in 2021. In 2021, the interest margin of commercial banks remained generally stable, and the net interest margin at the end of the year recorded 2.08% (yoy-0.2pct, QoQ + 0.1pct). In 2021, non interest income accounted for 19.81%, and the contribution of interest income to revenue increased.
Asset quality improved quarter by quarter, and capital adequacy ratios at all levels increased quarter on quarter. By the end of 2021, the non-performing loan ratio of commercial banks had decreased 2bp to 1.73% quarter on quarter, the lowest in recent years; Meanwhile, the concern rate decreased 2bp to 2.31% quarter on quarter, and the provision coverage rate was roughly flat quarter on quarter. By the end of 4q21, the core Tier-1 capital adequacy ratio, Tier-1 capital adequacy ratio and capital adequacy ratio of commercial banks were 10.78%, 12.35% and 15.13% respectively. The quarter on quarter ratio increased by 11bp, 23bp and 33bp respectively, and the capital adequacy ratio at all levels increased quarter on quarter.
The comprehensive performance of the six major state-owned banks exceeded market expectations, and will further benefit from the "wide credit" policy. 4q21 among the regulatory indicators of the CBRC, the comprehensive performance of state-owned banks is brilliant. 1) Profit growth: net profit maintained a high growth rate, and the absolute level was better than the market expectation. In 2021, the net profit of state-owned banks increased by 12.7% year-on-year, and has maintained a high growth rate of about 13% since the middle of 2021; 2) Credit extension: credit extension maintains a high outlook and highlights the "head goose effect". In terms of the growth rate of credit supply, except that the growth rate of state-owned banks increased by 0.6pct to 12.5% quarter on quarter in 21 years, the credit growth rate of other types of institutions decreased quarter on quarter. The new RMB credit scale in January exceeded expectations, mainly due to the high bearing of large state-owned banks, and the strong expectation of the market for the further overweight of the wide credit policy. It is expected that the state-owned banks will continue to play the role of "head geese". 3) Asset quality: the non-performing rate decreased quarter by quarter. Among all kinds of institutions, only state-owned banks have further strengthened their risk offset ability. By the end of 2021, the non-performing loan ratio of commercial banks had decreased 2bp quarter on quarter to 1.73%, which was the lowest in recent years. The non-performing rate of state-owned banks fell 6BP to 1.37% quarter on quarter. Among all kinds of institutions, the improvement is the most obvious and the absolute level is the lowest (the same as that of joint-stock banks). When the provision coverage ratio of commercial banks was roughly flat quarter on quarter, only the risk offset capacity of state-owned banks was further enhanced. 4) Capital level: the quarter on quarter increase is the most obvious, and the capital adequacy ratio is significantly higher than that of other institutional categories. At the end of the year, the capital adequacy ratio of state-owned banks was 17.29%, with a quarter on quarter increase of 45bp, which was significantly improved.
Multiple positive factors resonate and continue to be optimistic about the performance of the banking sector. In January, the "amount of credit" increased, and the "wide credit" policy signal was clear. There are also some structural problems behind the higher than expected total amount. The market has doubts about the sustainability of "credit easing". We believe that the current stage is still in the early stage of "credit easing", and we can expect further overweight of policies. Due to the good support of the bank's own basic mask, the relatively low valuation and institutional position ratio at this stage, the switching of market trading behavior and other factors, we continue to be optimistic about the banking sector. It is suggested to continue to grasp three main lines: 1) in the short term, the rebound of high-quality banks caused by phased mitigation of real estate risks, such as industrial, Ping An and China Merchants Bank; 2) In the medium term, local banks in high-quality regions such as Jiangsu and Zhejiang will operate steadily and have stronger sustainability. These banks' credit supply is relatively "prosperous in both supply and demand", and their business performance is more deterministic, such as Nanjing, Hangzhou, Jiangsu, Changshu and Chengdu; 3) The main line of large banks with stable credit supply, such as postal savings and China Construction Bank.
Risk analysis: the increase of macroeconomic pressure may affect the fundamentals of banks; Real estate risk situation disturbance factors.
