Sector performance: last week, the banking sector fell 3.68%, underperforming the CSI 300 index 2pct (CSI 300 index fell 1.67%); According to the first-class industry classification standard of CITIC, it is listed as 22 / 29 of all industries. In terms of individual stocks, Industrial And Commercial Bank Of China Limited(601398) (2.48%), China Construction Bank Corporation(601939) (2.11%), China Zheshang Bank Co.Ltd(601916) (0.98%), Agricultural Bank Of China Limited(601288) (0.93%), Bank Of China Limited(601988) (0.31%) led the increase Ping An Bank Co.Ltd(000001) (- 10.36%), Wuxi Rural Commercial Bank Co.Ltd(600908) (- 8.84%), Bank Of Hangzhou Co.Ltd(600926) (- 8.72%), Industrial Bank Co.Ltd(601166) (- 7.74%), China Merchants Bank Co.Ltd(600036) (- 7.43%) decreased significantly. Mainly due to the impact of the deteriorating situation in Russia and Ukraine, the market risk appetite decreased.
Since the beginning of the year, the valuation of the banking sector has been gradually repaired driven by the sustained efforts of the steady growth policy, the correction of real estate regulation policies and the deterministic and stable upward performance. We believe that the impact of market sentiment fluctuations is relatively short-term. Under the background of stable growth, the valuation of the banking sector is repaired.
The steady growth policy continues to work, and credit is expected to accelerate. With the continuous development of the “steady growth” policy and the central bank’s guidance to financial institutions to effectively expand loan lending, credit lending showed signs of acceleration. According to the credit data in January, the growth of medium and long-term loans is strong, reflecting the advance of infrastructure projects and the strength of infrastructure investment, which is expected to drive the growth of subsequent supporting credit demand. Previously, the central bank and the China Banking and Insurance Regulatory Commission issued a document to clarify that the loans related to affordable rental housing projects are not included in the concentration management of real estate loans, which also helps banks to vacate the credit line of ordinary real estate and increase the credit supply of affordable rental housing projects and ordinary real estate projects. Credit growth in the first quarter was supported by infrastructure and real estate investment.
Strict regulation of the deposit sector and optimization of asset liability structure are expected to hedge the pressure of narrowing interest rate differentials. Although several interest rate cuts in the early stage have brought downward pressure on the bank’s asset side yield, thanks to the early regulatory governance in the field of deposits (including the reform of deposit self-discipline pricing mechanism and the regulation of agreed deposits), as well as the relatively abundant level of inter-bank liquidity, the debt cost of commercial banks is expected to decline. At the same time, banks’ active adjustment of asset structure can also hedge the impact of the decline of loan interest rate on interest rate spread. The net interest margin is expected to be generally controllable and relatively stable.
Many real estate demand side policies have been relaxed, which is expected to improve market expectations, boost sales and mitigate risks. Since the beginning of the year, many local real estate demand side policies have been relaxed, including reducing the down payment ratio, housing loan interest rate and increasing the maximum amount of provident fund loans. This week, the six major state-owned banks simultaneously lowered the housing loan interest rate in Guangzhou. The first housing loan interest rate was reduced from LPR + 100bp (5.6%) to LPR + 80bp (5.4%), and the second housing interest rate was reduced from LPR + 120bp (5.8%) to LPR + 100bp (5.6%). It is expected that the adjustment of credit policy on the demand side of real estate may drive the improvement of market expectations and boost the sales of real estate market, which will help to improve the cash flow situation of real estate enterprises and alleviate the liquidity risk of the real estate industry.
It is expected that the fundamentals of subsequent industries will remain stable, which will form a good support for the stock price. At this stage, the sector valuation (0.61 times static Pb) and the proportion of institutional positions are still at a historical low. It is expected that the follow-up high-quality banks are expected to achieve better share price performance. It is recommended to select banks with first mover advantages in the field of wealth management, such as customer base, sales channels and product service system (such as China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) ), and high-quality banks with location advantages and market-oriented system and mechanism ( Bank Of Ningbo Co.Ltd(002142) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , etc.).
Risk tip: the economy stalled and went down, and the real estate regulation policies and regulatory policies changed unexpectedly.
