\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 166 Industrial Bank Co.Ltd(601166) )
Event overview
Industrial Bank Co.Ltd(601166) released the annual report: in 2021, the operating revenue was 221236 billion yuan (+ 8.91%, YoY), the operating profit was 95.199 billion yuan (+ 24.37%, YoY), and the net profit attributable to the parent company was 82.680 billion yuan (+ 24.10%, YoY); At the end of 2021, the total assets were 8.60 trillion yuan (+ 8.98%, yoy; + 1.25%, QoQ), deposits were 4.31 trillion yuan (+ 6.63%, yoy; + 2.38%, QoQ), and loans were 4.43 trillion yuan (+ 11.66%, yoy; + 2.66%, QoQ). Retail AuM2 85 trillion yuan (+ 9.01%, YoY); 2021a net interest margin 2.29% (-7bp, YoY); The non-performing loan ratio is 1.10% (- 2bp, QoQ), the provision coverage ratio is 268.73% (+ 5.67pct, QoQ), and the capital adequacy ratio is 14.39% (+ 1.47pct, QoQ); Annual roe13 94%(+1.32pct，YoY)。 The proposed cash dividend is 1.035 yuan / share, with a dividend rate of 26.01%.
Analysis and judgment:
Q4 interest collection business was significantly improved, with less provision for impairment + tax effect feeding back profits and accelerating the release
Industrial Bank Co.Ltd(601166) 2021 achieved revenue and PPOP + 8.9% / + 6.7% year-on-year. The overall revenue growth slowed down compared with 2020, mainly due to the pressure on the revenue business, rather than the hedging caused by the beautiful performance of the non revenue business; On a month on month basis, the revenue growth rate was still slightly higher than that of 8.1% in the first three quarters, and Q4 returned to double digits in a single quarter. Specifically, for each subject: 1) the year-on-year growth rate of annual net interest income was only 1.5%, and the decline of 7bp interest margin was the main influencing factor. However, from a marginal point of view, Q4 interest income business was greatly improved with the acceleration of loan delivery at the end of the year and the improvement of superimposed interest margin. The growth rate of net interest income in a single quarter was 3.4%, which was positive compared with the low point of Q3 – 9.2%. 2) Non interest income maintained a rapid growth, and the annual growth rate increased by 1.9pct to a high of 26.7% on the basis of q1-3. Among them, the net fee income and other non commission income were + 13% / + 50% year-on-year respectively, driving the proportion of non interest income in the revenue end to 34.2%, up 4.8pct from 2020. In terms of service fee structure, thanks to the development of wealth business, the service fees for payment and clearing, agency and custody achieved a rapid growth rate of + 31% / + 45% / + 20% respectively, and the growth rate of bank card income was 13%, up 5.5pct from 2020.
While the growth rate of revenue rebounded in the fourth quarter, the cost of operating expenses, especially management fees, increased, which is expected to be affected by the increase of employees and technology expenditure. The corresponding growth rate of PPOP in Q4 decreased by 3.1pct to 3.3% month on month. At the same time, the company continued to make less provision for profit in the fourth quarter. The Q4 impairment loss was 10.9% less year-on-year and 11.2% less year-on-year. Superimposed on the negative tax increase offset in the fourth quarter, the company contributed 24.1% of the growth rate of the annual net profit attributable to the parent company, which was further improved from the growth rate of 23.4% in the first three quarters, and the growth rate of Q4 in a single quarter was 26.4%. With the accelerated release of profits, roe increased by 1.32pct to 13.94% year-on-year in 2021.
In the fourth quarter, the expansion of financial statements slowed down, the lending increased steadily, and the demand of deposits increased
Asset side: the growth rate of total assets was 9% in 2021, and the expansion of table slowed down in the fourth quarter, with the scale of + 1.25% month on month. At the mercy of assets, the main additional loans and interbank assets increased by 11.7% / 36.2% respectively, and the loan investment increased steadily in the fourth quarter, with the scale month on month + 2.66%; The investment assets were only + 2.7% in the whole year, which mainly reduced the allocation of financial bonds, corporate bonds and derivatives. The investment scale of government bonds increased by 13.5% year-on-year, and the proportion further increased. Upward loan investment: 1) throughout the year, in addition to the significant increase in bill impulse, the annual growth rates of general public and retail loans were 8.8% and 13.2% respectively. At the end of the year, the proportion of overall asset side loans and retail loans in loans were 50% and 42.5% respectively, both slightly higher than that at the beginning of the year. Among retail loans, the growth rate of mortgage and credit card slowed down significantly, from more than 15% in 2020 to 6.5%, mainly due to the continued high growth of personal business loans, with an annual growth rate of 44%, accounting for 38% of the annual increment of retail loans (the stock proportion increased to 10.8%). 2) In a single quarter, in the second half of the year, the scale of corporate loans generally showed a downward trend quarter by quarter. Loans were concentrated in bills and retail, and 44% of the increment of retail loans in the second half of the year was invested in personal business loans. 3) For the public loan industry, Xingye adjusted the loan allocation in 2021. The industry dimension is divided into four categories: priority support, moderate support, prudent support and restricted support. 36% of the increment is invested in the manufacturing industry (with an annual growth rate of 17%), the transportation and power industries also have a high growth rate. The industries with reduced scale include finance, wholesale and retail, health and entertainment, and the loan scale of real estate and leasing service industries also decreased significantly in the second half of the year. Overall, there was pressure on lending throughout the year, and the growth rate of green, inclusive small and micro enterprises and medium and long-term manufacturing loans mainly supported exceeded 40%. At the end of 2021, the company’s core capital adequacy ratio was 9.81%, 27bp higher than Q3.
Liability side: the annual deposit growth rate was 6.6%, lower than 8.8% of total liabilities. Interbank and bonds are the main sources of liabilities. However, the performance of deposits improved marginally in the fourth quarter. Q4 scale increased by 2.3% month on month, the highest in a single quarter of the year, and the growth of active liabilities decreased significantly. The overall deposit structure improved throughout the year. While the scale of time deposits decreased in the fourth quarter, the increment was demand deposits. Demand deposits accounted for 44.4% at the end of the year, an increase of 1.1pct compared with 2020; The daily average balance of demand deposits accounted for 42.4% of the total daily average balance of deposits, with a year-on-year increase of nearly 2pct. It is expected to benefit from wealth management and investment banking strategy to help fund retention.
Net interest margin: the company disclosed that the net interest margin of 2021a was 2.29%, a year-on-year decrease of 7bp, mainly due to the reduction of loan yield by 27bp and deposit cost rate by only 4bp. It is estimated that the net interest margin in the second half of the year decreased by 19bp year-on-year, but only 3bp month on month compared with the first half of the year. The overall performance improved, the loan pricing basically stabilized, and the yield of other assets rebounded slightly.
The non-performing assets continued to fall by 2bp and the provision was sufficient. Many factors affected the upward trend of forward-looking indicators
Industrial Bank Co.Ltd(601166) in the fourth quarter, the non-performing scale increased slightly by 1.07% month on month, but the non-performing rate decreased by 2bp to 1.10% month on month, continuing to hit a new low, with a decline of 15bp in the whole year. However, the forward-looking indicators have increased, including 1.52% of concern categories at the end of the year, 5bp up month on month, rising quarter by quarter during the year, and the overdue rate reached 1.47% at the end of the year, an increase of 15bp and 4bp respectively; The corresponding overdue 90 + / NPL included 77.2%, basically unchanged in the medium term, up 1.5pct from the beginning of the year, but the overall recognition is still cautious. We calculated that the annual non-performing generation rate decreased by nearly 60BP to 1.08% year-on-year, and the generation rate increased in the second half of the year. The company disclosed that the upward movement of some indicators is mainly due to “strict recognition standards for overdue credit card loans in the fourth quarter, and the time point of overdue recognition is in advance”, and “it will not further migrate to non-performing” after collection. In addition, it also has the phased impact of the policy of delaying principal and interest payment, as well as the violation factors of a few real estate enterprises.
Structurally, the non-performing rates of public and retail were 1.1% and 1.01% respectively, down 15bp and 3bp respectively compared with 2020.
In the second half of the year, in addition to the one-time impact of credit card loans on the rise of the non-performing rate of individual loans by 4bp, while the non-performing rate of core manufacturing loans in corporate loans decreased, the non-performing industries that increased include wholesale and retail, real estate and information technology. Specifically looking at the risks of the real estate industry, Industrial Bank Co.Ltd(601166) this annual report has detailed disclosure of relevant information. At the end of the year, the balance of self operated loans + bonds + non-standard real estate business on the balance sheet was 1.65 trillion yuan, including 532.1 billion yuan of corporate financing dominated by high-quality developers and high-quality projects, and more than 80% of them have collateral or are high-quality regional projects. At the same time, the provision coverage of public real estate financing business is 305.14%, with strong risk offset ability. The off balance sheet real estate exposure that does not bear credit risk, including financial management + consignment + debt commitment, is 130 billion yuan, of which debt commitment accounts for 43% is the main part. The bottom layer of financial products is corporate credit customers, which are on the self operated white list and are all normal. At the end of the year, the exposure of Industrial Bank Co.Ltd(601166) full caliber local government financing platforms was 307.7 billion yuan, of which the exposure of domestic platform loans was 209.3 billion yuan, accounting for 4.73% of the total loans, a decrease of 1.31 PCT compared with 2020, and the non-performing rate was 1.97%, which had little impact on the scale.
at the end of Industrial Bank Co.Ltd(601166) year, the provision coverage rate was 268.73%, increased by 49.9pct and 5.7pct respectively on a month on month basis, the loan allocation ratio of 2.96% continued to be stable, and the overall margin of safety was high. In addition, under the condition of less provision of credit impairment loss year-on-year, the company mainly increased the impairment loss of debt investment, and the corresponding credit cost rate decreased by 25bp to 1.08% year-on-year.
Promote the capital light strategy, promote high off balance sheet growth, and make multi-dimensional breakthroughs in wealth business
At the business level, the construction of investment banking ecosystem and the expansion of off balance sheet volume have significantly boosted the company’s performance. In 2021, FPA increased by 15.5% year-on-year to 7.01 trillion yuan, of which the growth rate of off balance sheet FPA reached 21.9%, especially the growth rate of non-traditional FPA reached 33.2%, accounting for 72% of the annual increment, driving the proportion of stock to 38.7%. On the one hand, the revenue of large investment banking business including investment banking + agent ficc + market making transactions reached 10.8 billion yuan in the whole year, with a year-on-year increase of 30%. On the other hand, it also promoted the retention of settlement funds of key customers, contributing 469.9 billion yuan of daily average deposits, accounting for 11% of the total daily average deposits.
Compared with the investment banking sector, AUM scale growth in wealth business has slowed down, and the group caliber retail AUM has increased by 9% year-on-year to 2.85 trillion yuan. However, structurally, while the growth rate of deposits has slowed down, it is still mainly contributed by off balance sheet. The company’s financial management business has outstanding advantages, and its comprehensive financial management ability has ranked first in the banking industry for 17 consecutive quarters. With the development of financial management business, the balance of management wealth at the end of the year was 1.79 trillion yuan, a year-on-year increase of + 21%, and the scale of financial management including equity doubled. In addition, the company has made breakthroughs in multiple dimensions of wealth cooperation institutions, products, sales and trusteeship. The sales and financial management scale of “wealth cloud” increased by 429% year-on-year to 667.6 billion yuan, and the sales volume of complex products including private placement and family trust also doubled. The establishment of the wealth ecosystem, on the one hand, promoted the income of the wealth bank, including wealth management and asset management + consignment + custody income, to reach 23.4 billion yuan in 2021, with a year-on-year increase of 13.2%, of which the income of wealth management, fund consignment and custody was + 20.4% / + 104% / + 19.7% year-on-year respectively, supporting the middle income; On the other hand, it also promoted the volume of custody business. The scale of fund custody increased from + 37.45% to 2.13 trillion yuan year-on-year, jumping to the first place in joint-stock banks.
Investment advice
Generally speaking, the highlights of Industrial Bank Co.Ltd(601166) annual report focus on: 1) benefiting from the simultaneous rise of volume and price in the fourth quarter, the improvement of revenue and interest business promoted the further upward growth of revenue; 2) Promote the core strategy, promote the great development of off balance sheet investment banks and wealth, and contribute to the high growth in the middle of the year; 3) In the fourth quarter, with the improvement of deposit and loan structure, the net interest margin improved accordingly; 4) The asset quality is disturbed at one time, and some indicators fluctuate, but the overall non-performing rate continues to decrease, and the provision fully ensures the room for performance release.
We are optimistic about the continuous implementation of Industrial Bank Co.Ltd(601166) commercial investment linkage strategy, and the performance continues to verify its strategic effectiveness. In view of the performance of the annual report, we slightly adjusted the forecast of the company’s revenue of 260.3/2928 / – billion yuan in 22-24 years to 2374 / 2618 / 291.9 billion yuan, and the forecast of net profit attributable to the parent company of 95.4/115.2 / – billion yuan in 22-24 years to 95.1/108.8/122.6 billion yuan, with a corresponding growth rate of 15.0% / 14.5% / 12.7%; 22-24 years eps5 The forecast of 35 / 6.28 / – yuan is 4.44/5.10/5.77 yuan, corresponding to the closing price of 19.85 yuan / share on March 24, 2022, and Pb is 0.62/0.56/0.50 times respectively, maintaining the “buy” rating of the company.
Risk tips
1. The risk that the future repair of the overall economy is less than expected and the credit cost increases significantly;
2. Major business risks of the company.
