Summary of the event: 1) the CBRC announced the 21q4 supervision index of commercial banks: at the end of the fourth quarter, the domestic and foreign currency assets of banking financial institutions were 344.76 trillion yuan, a year-on-year increase of 7.82%; The total net profit of commercial banks in the whole year was 2.2 trillion yuan, a year-on-year increase of 12.6%, and the profit margin of Q4 assets was 0.79%; The net interest margin was 2.08%, up 1bp month on month; The defect rate was 1.73%, with a month on month decrease of 2bp; The coverage rate was 196.9%, with a month on month decrease of 9bp. 2) The central bank issued the fourth quarter monetary policy implementation report.
Main points:
Profitability: the rise of measurement prices in the four seasons helps the profit growth to rise steadily
In 2021, commercial banks achieved a cumulative net profit of 2.2 trillion yuan, with a year-on-year increase of 12.6%, which continued to increase by 1.2pct on the basis of the first three quarters. The growth rate of Q4 single quarter profit rebounded month on month, the stabilization of volume and price and the return of impairment provision to normal were the main contributing factors. Among them, the net interest margin of commercial banks in the fourth quarter was 2.08%, rising 1bp month on month. According to the goods policy report, the weighted average interest rate of new loans issued by financial institutions in December was 4.76%, significantly lower than that in September by 24bp, a new low in statistical data. It is mainly due to the wide monetary orientation stage of counter cyclical adjustment of monetary policy in the face of the pressure of economic recession and structural risks in the real estate field. At the same time, the weak demand for credit financing led to the increase of loans mainly by notes, The proportion of loans increased by LPR has also decreased month by month. It is difficult to improve the overall asset side pricing. The recovery of interest margin is expected to be more due to the adjustment of asset negative structure and the mitigation of debt cost. It is expected that the interest rate spread will continue to decline slightly this year, because the monetary policy has been strengthened since the beginning of the year, the LPR reduction has affected the annual interest rate spread to decline slightly, the financing demand has yet to be repaired, and the asset side pricing is still under pressure.
Asset quality: the apparent data continued to improve, but structural pressure appeared
The balance of Q4 non-performing loans and concerned loans increased by 0.5% and 0.7% month on month respectively. Meanwhile, the non-performing loan ratio and the proportion of concerned loans continued to decrease by 2bp to 1.73% and 2.31% month on month respectively, but the slope of index pressure drop was relatively flat compared with that in the previous period. At the end of the year, due to the digestion of bad stock in the early stage and the slowdown of impairment provision, the industry provision coverage and loan allocation decreased slightly by 9bp and 4bp to 196.9% and 3.4% respectively in the third quarter. Moreover, the pressure on the asset quality of Chengnong commercial bank showed that the non-performing rate increased by 8bp and 4bp month on month, and the allocation rate decreased by 8.5pct and 2.2pct month on month respectively.
Investment suggestion: the policy is made in advance, and the annual performance is still highly uncertain
Characteristics of business data of commercial banks in the fourth quarter: 1) the performance continued to be stable and good, maintained the rhythm of continuous improvement during the year, and the simultaneous rise of volume and price contributed to the month on month increase of Q4 single quarter profit growth; 2) At the end of the year, the credit easing policy was effective, and the growth rate of bank table expansion rebounded slightly, mainly driven by policies to increase the supply of credit. Large banks benefited from the advantages of customer base, and the growth rate of table expansion took the lead in stopping the decline; 3) The overall industrial interest margin stabilized and rebounded by 1bp, and the asset side pricing is under pressure. It is expected that the improvement of the liability side and the reduction of reserve requirement also provide more liquidity; 4) The apparent indicators of asset quality continued to improve, but structural pressure appeared, especially the non-performing rate of small banks rebounded. Therefore, while the certainty of the industry performance meets the expectations, the structural differentiation is reflected in: 1) the large bank customer group first benefits from the policy transmission and the improvement of enterprise operation, the volume and price rise at the end of the year, and the profit growth rate decreases slightly, or due to the impact of impairment provision, because the increase of appropriation rate is higher than that of other types of banks; 2) Both the volume and price of the stock market went down, but the asset quality continued to improve and the allocation rate remained basically stable, and the performance growth rate increased steadily; 3) Affected by the weakening financing demand, the scale growth of Chengnong commercial bank slowed down and the interest rate spread was basically stable, but the credit environment was relatively downward, the pressure on asset quality had appeared, and its performance growth still rebounded month on month, which was more affected by the base. Looking forward to 2022, we maintain the judgment that the performance is basically stable. Under the bottom line thinking of policy, the pessimistic expectation of the economy bottoms out, and the bank performance is still highly uncertain.
From the perspective of the sector, since the beginning of the year, the banking sector has continued to obtain absolute and relative returns, thanks to the support of a series of steady growth policies, including the continuation of interest rate cuts after reducing the reserve requirement and broadening the currency, which helps to improve the credit environment, enhance the market’s expectations for the economy, catalyze the beautiful performance of the performance express, and the phased switching of capital style. The higher than expected credit and social finance data in January also further verified the transmission from wide currency to wide credit. The Q4 goods administration report put forward the requirement of “stable total amount + excellent structure” for follow-up credit. We believe that the short-term policy environment is still relatively positive. It is expected that the performance of the annual report in the performance period of March and April will continue to support the valuation repair of the sector. Continue to recommend: China Merchants, Ping An, Xingye, Ningbo, Chengdu, Hangzhou, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) etc.
Risk tips:
1) the downward pressure on the economy continues to increase, and the credit cost has increased significantly;
2) business differentiation of small and medium-sized banks, major business risks of individual banks, etc.
