Event: on March 5, 2022, Premier Li Keqiang made a government work report (hereinafter referred to as the report), which put forward the main expected objectives and work tasks of 22-year development.
Clear objectives: GDP growth of about 5.5% and CPI of about 3%. The report proposes to “put steady growth in a more prominent position”. The target of about 5.5% is “medium and high-speed growth on a high base” and “it needs hard work to achieve it”, indicating the determination of the central government to stabilize growth. “Drive the expansion of effective investment”, infrastructure and real estate are expected to continue to make efforts, and the growth rate of fixed asset investment is uncertain.
Cargo policy overweight: expand the scale of new loans, maintain the stability of macro leverage ratio, and guide the decline of comprehensive financing costs. The report proposes to “expand the scale of new loans”. RMB loans increased by 19.94 trillion in terms of social finance in 21 years, with an increase of 21-22 trillion in 22 years, an increase of 11.0% – 11.5% over the loan balance in 21 years, only a slight decline over 11.6% in 21 years, and the growth rate may stabilize significantly. At the end of the 21st century, the macro leverage ratio was 264%, with a year-on-year decrease of 6.3pct. The report proposed to “maintain the basic stability of macro leverage ratio”, indicating that there may be more room to broaden credit this year.
Real estate policy: after Zhengzhou, more “policies for the city” may be on the way. Since the beginning of this year, there have been frequent policies to stabilize the real estate industry. Regulators including the China Banking and Insurance Regulatory Commission, the Ministry of housing and urban rural development and the central bank have made the reference of “implementing policies to promote the virtuous cycle and healthy development of the real estate industry due to the city”, which has been raised to the central level in the report. After Zhengzhou, as the first strong second tier city, launched the new real estate policy, more cities may launch real estate financing support and sales relaxation policies. The real estate base avoids the upgrading of credit risk and contributes to the stable repair of bank valuation.
Pratt & Whitney microenterprises: without specific growth targets, rural commercial banks may welcome development opportunities. The government work reports in 2020 and 2021 require the growth rate of inclusive small and micro loans of large banks to be 40% and 30% respectively. There is no quantitative expression in 2022, and it is proposed to “promote the significant growth of inclusive small and micro loans and continuously increase the proportion of credit loans and first loan households”. With the maturity of epidemic prevention and control experience, the inclusive small and micro credit policy may gradually return to normalization in the future.
Investment suggestion: steady growth and strengthening the repair of banks
At present, the main line of the banking sector is: wide credit → steady growth → improvement of economic expectations → valuation repair. The report set a target of about 5.5% and focused on steady growth, indicating the determination of economic recovery. The performance of banks is often ahead of the economic recovery, and we should double our confidence in the repair of bank valuation. It is suggested to pay attention to Bank Of Chengdu Co.Ltd(601838) , Bank Of Hangzhou Co.Ltd(600926) , Bank Of Ningbo Co.Ltd(002142) , Bank Of Jiangsu Co.Ltd(600919) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , and Industrial Bank Co.Ltd(601166) , China Merchants Bank Co.Ltd(600036) .
Risk warning: the economic recovery is lower than expected; Real estate risk exposure; The quality of bank assets fell more than expected.
