Events
On February 22, the State Council issued the opinions on doing a good job in the key work of comprehensively promoting rural revitalization in 2022 (hereinafter referred to as “document 1”). Under the grasp of steady growth, it is emphasized to revitalize rural financial services in order to achieve the goal of “common prosperity” as soon as possible.
Comments
An important starting point for short-term “steady growth” and the only way for long-term “common prosperity”, the Rural Revitalization policy is expected to continue to increase. The Rural Revitalization Strategy was first put forward at the 19th national congress in 2017. Since then, the central No. 1 document has continued to focus on “Rural Revitalization”, and the strategic objectives have been progressive layer by layer. In February 2018, it was made clear that the requirements for Rural Revitalization are “prosperous industry, livable ecology, civilized rural style, effective governance and rich life”. In September, China issued the first five-year plan to comprehensively promote the Rural Revitalization Strategy; The Rural Revitalization promotion law was issued in April 2019, which laid a legal foundation for Rural Revitalization. In 2022, under the pressure of China’s macroeconomic growth, promoting the “Rural Revitalization” strategy can effectively stimulate the recovery of rural infrastructure investment and rural residents’ consumption demand, which is an important starting point for “steady growth”; On the other hand, it can boost the level of rural economic development and narrow the income distribution gap between urban and rural areas. It is the only way to achieve “common prosperity”. Its importance is prominent. It is expected that the relevant policies of “Rural Revitalization” will be implemented in 2022.
We will strengthen financial services for rural revitalization, and the credit needs of rural infrastructure and residents are expected to be released. With the promotion of Rural Revitalization Strategy, financial institutions have increased their support for “agriculture, rural areas and farmers” finance in recent years. By the end of 2021, the balance of China’s agriculture related loans reached 43.21 trillion, an increase of 10.90% year-on-year. Rural loans / farmers’ loans / farmers’ production and operation loans increased by 12.10% / 14.00% / 14.10% year-on-year respectively, In addition, with the precise development of structural monetary policy, the poverty alleviation refinancing and agricultural refinancing increased year-on-year, with year-on-year growth rates of 31.03% and 37.99% respectively in June 2021. In 2022, the No. 1 document of the central government proposed to “strengthen rural revitalization financial services”, including increasing the support for small-scale refinancing and rediscount of agricultural support, and implementing a more preferential deposit reserve policy; Support various financial institutions to explore the medium and long-term credit model of agricultural and rural infrastructure and develop farmers’ credit loans. It is expected that in the process of strengthening the foundation of rural modernization, promoting the integrated development of rural primary, secondary and tertiary industries and improving rural infrastructure construction, the demand for rural infrastructure credit will be released; In addition, with the continuous improvement of the level of rural economic development, the growth rate of disposable income of rural residents continues to be higher than that of urban residents, and the credit demand potential of rural residents is expected to be released.
Bank of China and rural commercial behavior are the main force in serving the “Rural Revitalization” financial market. Large banks dominated by large state-owned banks and small banks dominated by rural commercial banks are the main force serving the “Rural Revitalization” market. At the level of state-owned banks, on the one hand, regulators have higher requirements for state-owned banks to implement rural strategies. On the other hand, the network layout of Agricultural Bank Of China Limited(601288) and Postal Savings Bank Of China Co.Ltd(601658) is relatively sinking, which has the network advantage of serving “agriculture, rural areas and farmers”. In 2020, the proportion of agriculture related loans / farmers’ loans of large banks was 36.26% / 34.91% respectively. ABC is deeply rooted in the local market, with dense layout of local outlets and strong information advantages. It carries out differentiated competition by serving local small and micro enterprises and the “three rural” market. In 2020, the proportion of agricultural related loans of ABC and farmers’ loans was 24.18% / 43.36% respectively. At the end of June 2021, the balance of Industrial And Commercial Bank Of China Limited(601398) / China Construction Bank Corporation(601939) / Bank Of Communications Co.Ltd(601328) / Postal Savings Bank Of China Co.Ltd(601658) agriculture related loans of listed banks in China was 2.50 trillion / 2.31 trillion / 0.60 trillion / 1.52 trillion respectively, accounting for 12.53% / 12.79% / 9.51% / 24.55% of the total loans. Among regional banks, Bank Of Zhengzhou Co.Ltd(002936) / Bank Of Guiyang Co.Ltd(601997) / Qilu Bank Co.Ltd(601665) / Chongqing Rural Commercial Bank Co.Ltd(601077) agriculture related loans accounted for a relatively high proportion, 24.53% / 45.44% / 20.52% / 31.63% respectively.
Investment advice
Rural Revitalization is an important starting point for achieving the goals of short-term “stable growth” and long-term “common prosperity”. It is expected that relevant policies will continue to increase. The realization of “Rural Revitalization” is inseparable from the financial support of financial institutions. In the process of increasing rural infrastructure investment and continuously improving the level of rural economic development, the credit demand of rural infrastructure and residents is expected to be released. As the main force of serving “agriculture, rural areas and farmers” finance, big banks and rural commercial banks are expected to continue to benefit. Among them, Postal Savings Bank Of China Co.Ltd(601658) has long-term experience in serving “agriculture, rural areas and farmers” finance, dense sinking outlets and advantages of financial science and technology capacity, or will reap policy dividends to the greatest extent. As a large state-owned bank positioned to “serve agriculture, rural areas and farmers”, Postal Savings Bank Of China Co.Ltd(601658) service “endowment, business model and developed sinking network may benefit from the rural business field. Therefore, we suggest actively paying attention to Postal Savings Bank Of China Co.Ltd(601658) and rural commercial banks with the advantages of “agriculture, rural areas and farmers” financial services.
Risk tips
The implementation of the policy is less than expected; The macroeconomic growth rate is down, etc.
