Highlights Review & focus next week – important news last week: 1) credit and social finance data were lower than expected. The central bank released financial data in 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 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; 2) The central bank turned over the balance profits. On March 8, the central bank announced that in order to enhance the available financial resources, the people’s Bank of China turned over the balance profits to the central finance according to law this year, with a total amount of more than 1 trillion yuan, which is mainly used to offset tax rebates and increase transfer payments to local governments. 3) Five Datong issued announcements on serving the real economy, saying that they had achieved a good business start since the beginning of the year, the growth of deposit and loan business was better than that in the same period last year, and the credit supply in key areas such as inclusive, green, manufacturing, Rural Revitalization and strategic emerging maintained a good trend. The quality of assets has been continuously improved and the provision foundation has been continuously consolidated. Announcement of important companies: Ping An Bank Co.Ltd(000001) issued the annual report of 2021 Bank Of Hangzhou Co.Ltd(600926) release the performance express of 2021 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) disclose the operating data from January to February Bank Of Nanjing Co.Ltd(601009) plans to acquire 41% equity of Suning Consumer Finance Co., Ltd. through agreement transfer. Next week’s focus: on Tuesday, the National Bureau of statistics released the statistics of industries above Designated Size from January to February; On Thursday, the Federal Reserve announced its interest rate decision; China Merchants Bank released its 2021 annual report on Friday.
Market and valuation review – the performance of banks was generally sluggish last week, and the correction of fund heavy positions was particularly obvious. (1) In the recent week, the Shenwan bank index fell by 4.62%, while the Shanghai and Shenzhen 300 index fell by 4.22% in the same period. The banking sector lost 40bps to the Shanghai and Shenzhen 300 index, ranking eighth among the 31 Shenwan level industries; (2) Among the sub sectors, the performance of stock banks was the worst, with the index falling 5.68%, outperforming the Shanghai and Shenzhen 300 index by 146bps; Large state-owned banks had the least decline, with the index falling 2.22%, outperforming the Shanghai and Shenzhen 300 index by 200bps; The city commercial bank index fell 4.07%, outperforming the Shanghai and Shenzhen 300 index by 16bps; The rural commercial bank index fell 3.14%, outperforming the Shanghai and Shenzhen 300 index by 109bps; (3) In terms of individual stocks, the individual performance of listed banks was sluggish, and only bank of Lanzhou (7.44%) closed up, with China Merchants Bank Co.Ltd(600036) (- 8.73%), Postal Savings Bank Of China Co.Ltd(601658) (- 7.59%) and Bank Of Ningbo Co.Ltd(002142) (- 6.42%) leading the decline. Valuations are still at record lows. At the end of last week, the bank sector as a whole pb0 60 times, Shanghai and Shenzhen 300 component stock PB1 From a long-term perspective, the valuation of the Shanghai and Shenzhen banking sector is 300 times lower than that of the Shanghai and Shenzhen banking sector.
Trend of interest rate and exchange rate – the capital converged last week, and the main repo interest rate increased. The 7-day reverse repo interest rate in the inter-bank market increased by 14bps to 2.03%. Last week, the central bank launched a 50 billion reverse repo operation. A total of 380 billion reverse repo expired, realizing a net return of 330 billion yuan. Next week, the central bank will have 50 billion yuan of reverse repo and 100 billion yuan of MLF maturing in the open market. In terms of exchange rate, the US dollar against RMB (CFETS) closed at 6.3400 last weekend, up 211 points from the previous weekend; The US dollar closed at 6.3586 against the offshore RMB, up 319 points from the previous weekend; The FOB / RMB spread decreased by 108 points to – 186 points.
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.
