Core view
As the real estate policy environment warms up, all regulatory departments will actively cooperate to prevent and resolve the risks of the real estate market. On March 16, 2022, the State Council held a special meeting of the financial stability and Development Commission, in which it was mentioned that “for real estate enterprises, it is necessary to timely study and put forward effective risk prevention and resolution solutions, and put forward supporting measures for transformation to a new development model”. On that day, the CSRC, the CBRC and the people’s Bank of China held separate meetings, saying that they will actively cooperate to effectively resolve the risks of real estate enterprises, Promote the virtuous circle and healthy development of the real estate industry. At the same time, the Ministry of Finance said that it did not have the conditions to expand the pilot cities of real estate tax reform this year, and the policy environment of the real estate industry continued to pick up. At present, the downward pressure on the fundamentals of the real estate industry is still on. The cumulative completed amount of real estate development investment in February 2022 increased by 3.70% year-on-year, down 0.7pct from December 2021; The cumulative year-on-year growth rate of commercial housing sales and sales area changed from positive to negative, which were – 19.30% and – 9.60% respectively; In February, the new medium and long-term loans (mainly mortgage loans) for residents were – 45.9 billion yuan, a year-on-year decrease of 457.2 billion yuan, the first negative increase since the release of the data, reflecting that residents’ expectations of house prices are still pessimistic. In the context of the aggravation of the financial difficulties of the real estate industry, the “stabilizing the economy” is blocked in stages. It is expected that the relevant policies of the real estate industry will be overweight and implemented, so as to promote the risk resolution of the real estate industry and realize the healthy development of the real estate industry.
The bank actively issued financial bonds with the theme of real estate M & A, promoted the structural optimization of the real estate industry, and benefited the bank’s credit risk mitigation. In December 2021, the central bank and the China Banking and Insurance Regulatory Commission issued the notice on doing a good job in M & a financial services for risk disposal projects of key real estate enterprises, encouraging banks to carry out M & a loan business in a stable and orderly manner, focusing on supporting high-quality real estate enterprises to merge and acquire high-quality projects of risky and difficult large real estate enterprises, and relevant M & A loans are no longer included in the “three red lines”. Since 2022, Shanghai Pudong Development Bank Co.Ltd(600000) and Industrial Bank Co.Ltd(601166) have issued 5 billion yuan and 10 billion yuan of real estate M & a themed financial bonds respectively, Ping An Bank Co.Ltd(000001) , Guangdong Development Bank and Bank Of Shanghai Co.Ltd(601229) also plan to issue real estate M & a financial bonds in the near future, with the scale of 5 billion yuan, 5 billion yuan and 3 billion yuan respectively. On the one hand, the issuance of real estate M & A bonds by banks can obtain stable long-term liquidity without occupying the amount of real estate loans. On the other hand, promoting the M & A and reorganization of real estate enterprises can effectively help optimize the industry structure, alleviate the cash flow pressure of high-quality real estate enterprises, and form a positive impact on the release of credit risk of commercial banks.
Indemnificatory rental housing loans are not included in the concentration management, which provides room for bank real estate loans and indirectly promotes the implementation of wide credit. In February 2022, the CBRC and the Ministry of housing and urban rural development issued the guidance on bank insurance institutions supporting the development of indemnificatory rental housing, supporting banking financial institutions to issue financial bonds and raise funds for the issuance of indemnificatory rental housing loans; Make it clear that the relevant loans issued by banking financial institutions to affordable rental housing projects are not included in the concentration management of real estate loans. Indemnificatory rental housing loans do not occupy the amount of real estate loans, which can indirectly promote the implementation of wide credit. On the one hand, banks can increase credit support for indemnificatory rental housing projects under the encouragement of policies. By the end of September 2021, the balance of China’s indemnificatory housing development loans was 4.64 trillion, a year-on-year increase of – 2.00%, accounting for only 9.03% of the total real estate loans. It is expected that after the implementation of the policies, Affordable housing development loans are expected to grow rapidly; On the other hand, it also alleviates the pressure drop of real estate loans from super line banks. For banks that do not exceed the standard, it can also make room for their regular real estate loans.
According to the disclosed annual reports of banks, the risks of China Merchants Bank Co.Ltd(600036) and Ping An Bank Co.Ltd(000001) real estate industry in 2021 are generally controllable China Merchants Bank Co.Ltd(600036) and Ping An Bank Co.Ltd(000001) took the initiative to disclose their real estate industry risks in their 2021 annual reports. By the end of 2021, China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) real estate related real and contingent credit, self operated bond investment, self operated non-standard investment and other businesses bearing credit risks were 511489 billion yuan and 341089 billion yuan respectively, accounting for 6.93% and 5.53% of the total assets respectively, and the proportion remained low. Compared with the first half of 2021, the proportion of controllable non-performing loans to the real estate industry was 340.78% and PCT to the real estate industry was 340.4%, respectively, accounting for 351.0% and 41.4% of the total non-performing loans to the real estate industry, respectively.
Investment advice
On March 16, the State Council held a special meeting of the financial stability and Development Commission, in which it was mentioned that “for real estate enterprises, it is necessary to timely study and put forward effective risk prevention and resolution solutions”. On the same day, various regulatory departments also successively said that they will actively cooperate to resolve the risks of the real estate industry and the real estate policy environment will pick up. At the same time, banks actively issue real estate M & a financial bonds to promote the optimization of industry structure. The risks in the real estate industry are expected to be effectively resolved, which is conducive to the credit risk mitigation of commercial banks. In addition, the housing rental market has ushered in a good opportunity for development. The non inclusion of affordable rental housing project loans into concentration management can indirectly promote the implementation of wide credit. At present, the banking sector is at the bottom of valuation. Under the background of “stabilizing the economy” with the dual force of monetary policy and fiscal policy, the bank credit risk is gradually reduced and the investment value of bank shares is highlighted. Therefore, we suggest to pay active attention to the banking sector, as well as large banks and joint-stock banks with first mover advantages in Housing leasing financial business.
High frequency data tracking
The banking sector outperformed Shanghai and Shenzhen 300
The banking sector outperformed Shanghai and Shenzhen 300 as a whole. Last week (03.14-03.18), the A-share market showed an overall downward trend, and the Shanghai Composite Index fell to around 325107. The banking sector outperformed Shanghai and Shenzhen 300 as a whole. Among them, the banking sector index (Shenwan level) fell by 0.22% as a whole, outperforming the Shanghai and Shenzhen 300 index (- 0.94%) by 0.72 percentage points. Most of the industry wide indexes fell last week, with coal, environmental protection, public utilities and steel falling most significantly. Real estate, non bank finance and other sectors rose sharply.
The banking sector fell as a whole
The banking sector fell as a whole. Last week (03.14-03.18), bank stocks in the A-share market fell as a whole. Among them, Bank of Lanzhou (8.17%), Bank Of Chongqing Co.Ltd(601963) (6.75%), China Merchants Bank Co.Ltd(600036) (3.87%) increased, and Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) (- 4.80%), Wuxi Rural Commercial Bank Co.Ltd(600908) (- 4.68%) and Bank Of Ningbo Co.Ltd(002142) (- 4.67%) decreased significantly.
Inter bank liquidity tracking
Last week (03.14-03.18), the weighted interest rate of pledged repo of deposit institutions rose as a whole. Weighted interest rate of pledged repo of deposit institutions: 1.99% in one day, down 5bp from the previous week; Weighted interest rate of pledged repo of deposit institutions: 2.06% in 7 days, down 4bp from the previous week; The weighted interest rate of treasury bond pledged repo gc001 decreased by 3bp compared with the previous week, and gc007 increased by 5bp compared with the previous week.
Financial products tracking bank
In the second week of March (202203.07202203.13), the expected rate of return of RMB financial products of all terms in the whole market was relatively stable. In the second week of March 2022, the expected annualized yield of financial products of all terms in the whole market is 1.85% in two weeks, the same as the previous week and 1.88% in one month, the same as the previous week; 1.90% in two months, unchanged from the previous week; 3.21% in 6 months, down 2bp compared with the previous week. According to the income of financial products of different types of commercial banks, the income of large commercial banks is 1.88%, and joint-stock banks, urban commercial banks and rural commercial banks have not been announced.
Tracking of interbank certificates of deposit of commercial banks
Last week (03.14-03.18), the issuing interest rate of interbank certificates of deposit decreased slightly, including 2.42% in one month, 2.50% in three months and 2.63% in six months; Compared with the previous week, the change range of deposit certificate issuance interest rate is 1bp, – 1bp and – 1bp respectively, among which the inter-bank deposit certificate issuance interest rate of urban commercial banks is higher as a whole.
Risk tips
Real estate industry policy tightening; Macroeconomic growth is down; The epidemic repeatedly exceeded expectations.
