Event: on March 11, 2022, the central bank released the financial data of February. In February, RMB loans increased by 1.23 trillion, a year-on-year decrease of 125.8 billion yuan, and the growth rate of RMB loan balance decreased by 0.1 percentage point to 11.4% compared with that at the end of January; Social finance increased by 1.19 trillion yuan, a year-on-year decrease of 534.3 billion yuan, and the balance of social finance increased by 10.2% year-on-year, down 0.3 percentage points from the end of February; M2 increased by 9.2% year-on-year, and the growth rate decreased by 0.6 percentage points compared with January.
The new credit is lower than expected, and the credit structure has not been improved. In February, RMB loans increased by 1.23 trillion, a year-on-year decrease of 125.8 billion yuan, lower than the market and our expectations. From the perspective of credit structure, the new enterprise loans in February were 1.24 trillion yuan, an increase of 40 billion yuan year-on-year, of which the short-term loans increased by 161.4 billion yuan, the bill financing increased by 490.7 billion yuan, and the medium and long-term loans decreased by 594.8 billion yuan year-on-year. The impulse of bills and short-term loans was obvious, partly affected by the Spring Festival, but the weakness of medium and long-term loans also reflected the lack of phased demand for entity financing. In February, residents’ credit contracted by 336.9 billion yuan, a year-on-year decrease of 479 billion yuan, of which short-term loans contracted by 291.1 billion yuan, a year-on-year decrease of 22 billion yuan, reflecting weak residents’ consumption, medium and long-term loans decreased by 45.9 billion yuan, a year-on-year decrease of 457.2 billion yuan, reflecting that the release of mortgages is still limited. Generally speaking, in addition to the dislocation disturbance of the Spring Festival, the slowdown of credit growth in February is mainly related to the following factors: 1) the base effect of bank credit impulse at the beginning of the year; 2) The repeated superposition of the epidemic, the increase of environmental uncertainty at home and abroad, the expectation of enterprises for the future economy has not improved, and the demand for effective financing is insufficient; 3) The real estate market continues to cool, and the demand side remains weak. Looking forward to the follow-up, the supervision has repeatedly emphasized “enhancing the stability of the growth of total credit”. The government work report clearly proposed to increase the total credit. In addition, the real estate demand side policy has also been significantly relaxed. Under the policy demand of stabilizing credit, we believe that the follow-up credit still has a certain support.
Credit dragged down the increment of social finance, and the growth rate of social finance decreased slightly. In February, the increment of social finance was 1.19 trillion yuan, a year-on-year decrease of 534.3 billion yuan, and the growth rate of social finance stock decreased by 0.3 percentage points to 10.2% month on month. In terms of structure, people’s loans with social finance caliber increased by 908.4 billion yuan, a year-on-year decrease of 432.9 billion yuan. In February, government bonds and corporate bonds increased by 272.2 billion yuan and 337.7 billion yuan respectively, with an increase of 170.5 billion yuan and 202.1 billion yuan year-on-year, which brought support to social finance. In terms of off balance sheet financing, entrusted loans and trust loans decreased by 7.4 billion yuan and 75.1 billion yuan respectively, and undiscounted bills decreased by 422.8 billion yuan, an increase of 486.7 billion yuan year-on-year. In February, domestic stock financing of non-financial enterprises was 58.5 billion yuan, a year-on-year decrease of 10.8 billion yuan. Overall, credit and undiscounted bills were the biggest drag on social finance in February.
M1 growth picked up and fiscal deposits increased significantly. The growth rate of M1 in February was 4.7%, 6.6 percentage points higher than that in January. The growth rate of M2 was 9.2%, down 0.6 percentage points month on month, and the m1-m2 scissors difference converged to – 4.5%, reflecting the improvement of the vitality margin of real enterprises to a certain extent. In February, new deposits increased by 2.54 trillion yuan, an increase of 1.39 trillion yuan year-on-year. In terms of structure, resident deposits migrated to enterprise deposits and non bank deposits, and fiscal deposits were higher, an increase of 1.45 trillion yuan year-on-year. We think it may be related to the slowdown of fiscal expenditure.
Investment proposal and investment object
The scale and structure of credit and social finance data in February were lower than expected. Considering the pressure of the current economic environment outside China and the high economic growth target of the whole year, it can be predicted that the strength of the follow-up steady growth policy is expected to be further improved, continue to overweight the bottom economy and maintain the extremely pessimistic expectation of the market. At present, the static Pb valuation level of the sector is only 0.63x, which is at a historical low. Under the background of the continuous force of the steady growth policy, the bank fundamentals are still supported. We are still optimistic about the opportunity to repair the valuation of the sector and continue to maintain the “optimistic” rating of the industry.
In terms of individual stocks, it is suggested to pay attention to: 1) value targets with excellent historical profitability and leading asset quality represented by China Merchants Bank Co.Ltd(600036) ( China Merchants Bank Co.Ltd(600036) , Unrated) and Bank Of Ningbo Co.Ltd(002142) ( Bank Of Ningbo Co.Ltd(002142) , Unrated); 2) Undervalued targets represented by Industrial Bank Co.Ltd(601166) ( Industrial Bank Co.Ltd(601166) , not rated) and Postal Savings Bank Of China Co.Ltd(601658) ( Postal Savings Bank Of China Co.Ltd(601658) , not rated); 3) Urban rural commercial banks with strong regional economic advantages represented by Shanghai Rural Commercial Bank Co.Ltd(601825) ( Shanghai Rural Commercial Bank Co.Ltd(601825) , not rated), Bank Of Chengdu Co.Ltd(601838) ( Bank Of Chengdu Co.Ltd(601838) , not rated), Bank Of Nanjing Co.Ltd(601009) ( Bank Of Nanjing Co.Ltd(601009) , not rated).
Risk tips
The economic downturn exceeded expectations, resulting in higher than expected pressure on the asset quality of the industry.
The liquidity risk of real estate enterprises continues to spread, disturbing the asset quality of banks.
The strength of financial supervision rose more than expected.
