In the event, the central bank issued the 2021q4 monetary policy implementation report, and the CBRC released the data of major regulatory indicators of commercial banks in 2021.
Bank profits continued to increase, led by state-owned banks and joint-stock banks, and urban commercial banks improved significantly. In 2021, commercial banks achieved a total net profit of 2.18 trillion yuan, a year-on-year increase of 12.63%, further expanding from 11.45% in the first three quarters of 2021, maintaining a double-digit growth rate. It is expected to be affected by the high growth of other non interest income and the easing of the pressure on provision. In terms of bank types, state-owned banks and joint-stock banks took the lead, and their net profits increased by 12.71% and 13.38% year-on-year respectively; The growth rate of net profit of urban commercial banks improved significantly, with a year-on-year increase of 11.59%, far ahead of the growth rate of 0.34% in the third quarter; The net profit of rural commercial banks increased by 9.06% year-on-year, with a more stable performance.
The loan interest rate of financial institutions fell to a low point, the net interest margin of banks stabilized and the repair trend remained unchanged. According to the 2021q4 monetary policy implementation report, by the end of 2021, the weighted average interest rate of RMB loans of financial institutions was 4.76%, down 24bp month on month; Among them, the interest rates of general loans, enterprise loans, bill financing and personal housing loans were 5.19%, 4.57%, 2.18% and 5.63% respectively, with month on month changes of – 11bp, – 2bp, – 47bp and 9bp respectively. The overall decline of loan interest rates of financial institutions is mainly affected by multiple factors such as weak credit demand, interest rate cut and low interest rate bill impulse. Nevertheless, the bank’s net interest margin stabilized and the repair trend remained unchanged, which is expected to benefit from the optimization of liability side costs. In 2021q4, the net interest margin of commercial banks was 2.08%, up 1bp month on month.
The asset quality of state-owned banks and joint-stock banks is relatively good, the improvement of capital adequacy ratio is more obvious, the non-performing rate and provision coverage are differentiated, and the performance of state-owned banks and joint-stock banks is relatively good. By the end of 2021, the non-performing rate of commercial banks was 1.73%, down 2bp month on month; Among them, the non-performing rates of state-owned banks, joint-stock banks, urban commercial banks and rural commercial banks were 1.37%, 1.37%, 1.90% and 3.63% respectively, with month on month changes of -0.06, – 0.03, 0.08 and 0.04 percentage points respectively; The provision coverage rate of commercial banks was 196.91%, down 0.09 percentage points month on month. Among them, the provision coverage rates of state-owned banks, joint-stock banks, urban commercial banks and rural commercial banks were 239.22%, 206.31%, 188.71% and 129.48% respectively, with month on month changes of 6.65, -0.39, – 8.47 and – 2.25 percentage points respectively. In addition, the capital adequacy ratios of various banks have improved to varying degrees.
By the end of 2021, the capital adequacy ratio, tier 1 capital adequacy ratio and core tier 1 capital adequacy ratio of commercial banks were 15.13%, 12.35% and 10.78% respectively, with a month on month increase of 0.33%, 0.23 and 0.12 percentage points respectively. Among them, the capital adequacy ratios of state-owned banks, joint-stock banks, urban commercial banks and rural commercial banks were 17.29%, 13.82%, 13.08% and 12.56% respectively, with a month on month increase of 0.45, 0.42, 0.12 and 0.1 percentage points respectively.
There is still room for the policy to exert its force, taking into account the total amount + structure, making a good credit environment, and further optimizing the 2021q4 monetary policy implementation report. It is pointed out that the prudent monetary policy should be flexible and appropriate, strengthen cross cycle regulation, give full play to the dual functions of the total amount and structure of monetary policy tools, and pay attention to sufficient force, accurate force and forward force. We believe that with the support of the steady growth policy, the effect of credit easing is expected to continue to release, help steadily increase credit supply and further optimize the structure, and form support for macroeconomic repair.
It is suggested that we continue to pay attention to the release of credit relief and the recovery of the banking industry. We are optimistic about the opportunity to repair the low valuation of bank stocks in the first quarter and maintain the “recommended” rating. In terms of individual stocks, two main lines are followed: (1) high quality urban and rural commercial banks with obvious regional economic advantages, strong growth momentum at the asset end and leading asset quality in the industry are recommended Bank Of Nanjing Co.Ltd(601009) (601009), Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) (601128) and Bank Of Hangzhou Co.Ltd(600926) (600926); (2) For individual stocks with high contribution to medium income, leading wealth management business and expected medium and long-term premium valuation, it is recommended to China Merchants Bank Co.Ltd(600036) (600036), Ping An Bank Co.Ltd(000001) (00000 1).
The risk indicates that the macroeconomic growth is lower than expected, resulting in the risk of deterioration of asset quality.
