Event: on March 10, Ping An Bank Co.Ltd(000001) released the annual report for 2021, with revenue of RMB 169383 billion, yoy + 10.3%; Net profit attributable to parent company: 36.336 billion yuan, yoy + 25.6%; Net interest margin 2.79% (- 9bp); The defect rate is 1.02% (- 16bp), and the provision coverage rate is 288.4% (+ 87.02pct).
Revenue growth bottomed out and rebounded, and profits maintained high growth. The growth rate of revenue in 21 years was + 1.2pct compared with that in 21q3, of which the growth rate of net interest income stabilized due to the better credit supply in 21q4; The growth rate of net handling fee income also improved slightly. Scale expansion and profit back feeding by provision are the main factors for the high growth of net profit attributable to the parent company.
The wealth management strategy has achieved remarkable results. The growth rate of double principal and private banking was more than 34.5% year-on-year, with a year-on-year increase of AUM. Continued efforts in wealth management are expected to achieve the double benefits of medium income and net interest margin.
The structure at both ends of negative capital was improved, and the net interest margin was stable and positive. In the past 21 years, the narrowing trend of net interest margin has basically stopped, and personal loans represented by credit cards have been well invested, and their proportion in interest bearing assets has continued to increase; Benefiting from the wealth management strategy, the growth rate of demand deposits on the liability side took the lead. Looking forward to 2022, we believe that the net interest margin benefits from the structural optimization of assets and liabilities, and is expected to continue the good trend.
The non-performing rate continued to decline and the provision increased significantly. The non-performing burden was basically removed, and the non-performing rate reached a new low in 15 years. Among them, the overdue rate was affected by the change of identification standards, but it reflected the “one-time” feature. Provision coverage increased significantly, leaving room for restructuring for profit release.
“Housing related” concerns can be less. Previously, due to the influence of real estate logic, the valuation was suppressed. This time, the real estate risk exposure was fully disclosed. From the perspectives of volume, non-performing rate and policy, the risk is more controllable, and the market concern is expected to be alleviated.
Investment suggestions: revenue growth bottomed out and rebounded, wealth management strategy continued to advance, and asset quality continued to improve; Previously, due to the influence of real estate logic, the valuation was greatly suppressed. The complete disclosure of real estate exposure is expected to alleviate market concerns and help the valuation repair. It is estimated that the EPS of 22, 23 and 24 years will be 1.86 yuan, 2.44 yuan and 3.20 yuan respectively. The closing price on March 10, 2022 corresponds to 0.8 times of 22 years Pb, maintaining the “recommended” rating.
Risk warning: the macroeconomic situation is down; Credit risk outbreak; The transformation progress is less than expected.