Performance of the banking sector: dragged down by the tense situation in Russia and Ukraine, the market’s fear that “credit easing” is not as expected, the bank’s profit transfer, the recurrence of risk events in real estate enterprises and other factors, the banking index fell 4.6% this week, underperforming the Shanghai and Shenzhen 300 index by 0.38pct. Since the beginning of the year, the bank index has fallen by 1.1%, but outperformed the CSI 300 index by 11.72 PCT, reflecting a strong defensive attribute; At the same time, the internal differentiation of the sector is obvious, and the performance of high-quality regional banks is relatively strong, such as Bank Of Chengdu Co.Ltd(601838) (+ 20.8%), Bank Of Jiangsu Co.Ltd(600919) (+ 13.9%), Bank Of Nanjing Co.Ltd(601009) (+ 13.1%), Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) (+ 10.7%), Bank Of Hangzhou Co.Ltd(600926) (+ 9.6%); The performance of state-owned banks was relatively stable, with a cumulative increase of 1.9%; Stock banks were relatively weak, with a cumulative decline of 3.7%.
The financial data in February was lower than the market expectation, and “steady growth” needs to focus on the demand side. On Friday, the people’s Bank of China released financial data for February, which was lower than market expectations, mainly as follows: ① in terms of total amount, the new RMB loans in February were 1.23 trillion, with a slightly weak performance; Social finance increased by 1.19 trillion, a year-on-year decrease of 531.5 billion, significantly lower than the market expectation of 2.2 trillion; ② Structurally, under the effect of the Spring Festival, residents’ medium and long-term loans increased by – 45.9 billion in February, the first negative growth in nearly 15 years, reflecting the downturn in mortgage demand under the background of continuous decline in housing sales. Superimposed on the deterioration of residents’ employment, income and expectation, the slow expansion of consumer credit, and the periodic collapse of residents’ balance sheet. ③ The bill discount rate hit “zero interest rate” again at the end of February, reflecting the lack of effective credit demand. The increase of “corporate short-term loan + bill discount + non bank loan + SCP” not only reflects the serious “impulse” at the end of the month, but also may have the space to falsely increase the idling or arbitrage of the balance sheet of financial institutions. On the whole, the financial data in February performed poorly. In addition to seasonal factors, the lack of total demand is an important reason. The subsequent launch of various “steady growth” initiatives needs to focus more on the “demand side”, especially the stability in the real estate field, which needs to be stimulated on the demand side under the principle of “implementing policies for the city”.
The five major banks issued announcements to stabilize expectations, and the operation of Jiangsu and Zhejiang regional banks was stable. On March 10, the five major banks announced that their operations were stable in the first two months, their business growth areas focused on Inclusive Finance, green development, scientific and technological innovation and high-end manufacturing, and their credit resources were more inclined to developed regions such as the Yangtze River Delta, the Pearl River Delta and the Chengdu Chongqing economic circle. From January to February this year, various business indicators of large banks made steady progress, and the growth of deposits and loans was better than that in the same period last year. Meanwhile, on March 9, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released its business performance for 1 ~ 2 months. The data showed that the bank increased RMB loans by about 9.5 billion in the first two months, an increase of about 1.7 billion over 1q21. It is estimated that the loan growth rate at the end of 1q22 will reach 27%; From January to February 2022, the growth rates of revenue and profit were 27.9% and 25.6% respectively. Therefore, it is speculated that Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) net interest margin is generally stable. The business situation of the banking industry in the first two months basically confirms our previous judgment, that is, large banks play the role of “head geese” in “stable growth” and the high growth under the “Pro cycle” of local corporate banks in economically developed regions of Jiangsu and Zhejiang. However, since the beginning of the year, joint-stock banks may be suffering from the double dilemma of difficult loan growth and large interest margin squeeze.
Investment logic and suggestions of bank stocks: under the expectation of “stable growth” and “wide credit”, the bank sector has a strong trend in the beginning of the year. Since late February, the sector has been adjusted due to the situation in Russia and Ukraine and the differences in the market on the sustainability of “wide credit”. On March 5, the government work report defined the GDP growth target of about 5.5%, and clearly put forward “strengthening the implementation of prudent monetary policy” and “expanding the scale of new loans”. The financial data in February was significantly lower than expected, and the stimulus intensity of follow-up policies is expected to increase to dredge the transmission chain of “stable credit – stable investment – stable growth”. Real estate and infrastructure construction are the ballast for stabilizing credit and are expected to be an important direction for policy development. The bank stock market is expected to accompany the whole “steady growth” process. Focus on the main line of steady operation of urban rural commercial banks in high-quality regions such as Jiangsu and Zhejiang, and continue to recommend Nanjing, Changshu, Jiangsu and Bank Of Hangzhou Co.Ltd(600926) . The reasons are as follows: 1) Jiangsu and Zhejiang have strong economic vitality, large investment in infrastructure, accelerating urbanization, and the credit supply of local high-quality corporate banks is “prosperous in both supply and demand”, with stronger certainty of business performance. 2) Banks with convertible bonds such as Hangzhou and Nanjing have strong demands for capital replenishment, and their performance is expected to be released continuously.
Risk warning: the economic growth rate is lower than expected; Real estate risk situation disturbance; Financial profit giving entities exceeded expectations.
