\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 998 China Citic Bank Corporation Limited(601998) )
Event: on March 24, China Citic Bank Corporation Limited(601998) released the annual report of 2021. The annual operating revenue was 204557 billion yuan, yoy + 5.0%, and the net profit attributable to the parent company was 55.641 billion yuan, yoy + 13.6%. The weighted average return on net assets is 10.73%, yoy + 0.62pct.
Comments:
The performance growth rate remained relatively high, and the support of non interest income was obvious. The year-on-year growth rates of the company’s annual operating revenue and net profit attributable to the parent company in 2021 were + 5.0% and + 13.6% respectively, increased by 1.0% and 0.5pct respectively compared with 1-3q21, of which the year-on-year growth rates of net interest income and non interest income were – 1.7% and + 28.1% respectively. Split the profit growth structure, with asset scale expansion and non interest income as the main contribution sub items, driving the performance growth of 26.5 and 24.9 PCT respectively; From the perspective of month on month, the company’s annual performance growth in 2021 increased quarter on quarter, mainly benefiting from the good performance of the non interest end in the fourth quarter.
The speed of table expansion slowed down and the proportion of loans increased. At the end of 2021, the total assets of the company increased by 7.1% compared with the end of the previous year, and the growth rate decreased by 0.7pct compared with the end of 21q3. Among them, the new assets in the fourth quarter were 149869 billion yuan, a year-on-year decrease of 37.933 billion yuan, and the expansion speed of the company slowed down. In terms of structure, new credit accounted for 66.9% of new interest bearing assets in the fourth quarter of 21, and the proportion of stock loans in interest bearing assets increased slightly by 0.1pct to 61.1% in 2021 compared with the end of 21q3, with little change in asset structure month on month; For the whole year of 2021, new loans accounted for 70.4% of the new interest bearing assets in the whole year, and the expansion of assets was significantly driven by credit. Although the proportion of stock loans in interest bearing assets was basically the same as that at the end of 21q3, it was still 0.7pct higher than that at the beginning of the year.
Corporate credit resources are concentrated in low-risk assets, and new personal loans are focused on housing mortgage loans. The company’s new loans in 21 years were 382662 billion, a year-on-year decrease of 92.658 billion, which was mainly dragged down by corporate and bills, and the scale of new retail credit was basically the same year-on-year. In terms of structure, the newly increased corporate, retail and bills in the whole year of 21 were roughly distributed in a ratio of 3:3:1. Specifically, 1) the newly increased corporate loans were 165779 billion, a year-on-year decrease of 49.102 billion. The credit resources were concentrated in the credit field with excellent asset quality and strong countercyclical attribute. The newly increased loans in leasing, business services and water conservancy and environment accounted for 25.7% and 25.4% respectively; At the same time, the company increased its investment in the manufacturing industry, accounting for 17.7%; 2) Retail credit increased by 161924 billion, an increase of 838 million year-on-year. New personal loans were mainly concentrated in housing mortgage loans and consumer loans, accounting for 30.8% and 26.3% respectively. Since the second half of the year, with the tightening of real estate financing and the rising situation of consumer credit risk, the company’s investment in housing mortgage, credit card and consumer loan in the second half of the year was less than that in the first half of the year, and instead increased the investment in business loan. In the second half of the year, the new business loan was 24.884 billion, an increase of 21.358 billion over the first half of the year.
The proportion of market liabilities increased, and the deposit pressure showed signs of easing. At the end of 2021, the growth rates of the company’s total liabilities and deposits were + 6.5% and + 4.6% respectively, with changes of – 0.7 and 0.1pct respectively compared with the end of 21q3. From the perspective of liability structure, the proportion of deposits, bonds payable and inter-bank liabilities at the end of 2021 was 65.5%, 13.2% and 21.3% respectively, with changes of – 0.8%, 0.7 and 0.1pct respectively compared with the end of 21q3. In 2021, the overall pressure on the joint-stock banks to stabilize and increase deposits was large, and the growth rate of corporate deposits also slowed down. The deposit and loan increased by 1.3pct to 102.5% compared with the end of 21q3. The pressure on deposits to attract deposits in the fourth quarter has shown signs of easing. In order to make up for the growth pressure on the deposit side, the company increased its absorption of market liabilities, and the proportion of bonds payable and interbank liabilities increased.
In the second half of 2021, the interest margin remained relatively resilient. In 2021, under the background of reducing fees and transferring profits and insufficient effective demand of the real economy, the asset side pricing of the company was under pressure, but the downward range gradually slowed down during the reporting period. The rate of return on interest bearing assets in 2021 was 4.24%, down 23bp and 5bp respectively compared with 2020 and 1h21. On the liability side, the company hedged the downward pressure on interest margin by reducing high-cost deposits. The cost ratio of interest paying liabilities in 2021 was 2.25%, a decrease of 4bp compared with the beginning of the year. As the downward slope of asset side pricing slows down and the superposition company continues to optimize the deposit structure, the interest rate spread has maintained strong toughness since the second half of 2021. The interest rate spread in 2021 is 2.05%, with a quarter on quarter decrease of 1bp.
Non interest income achieved good performance, mainly supported by financial management business and investment income. In 2021, the company’s non interest income increased by 28.1% year-on-year to 56.661 billion yuan. Among them, the net handling fee and commission income increased by 24.4% year-on-year to 35.870 billion yuan, mainly supported by the growth of handling fee income of financial management business; Net other non interest income increased by 35.2% year-on-year to 20.791 billion yuan, mainly driven by the year-on-year high increase in investment income. The decline of 21q4 broad-spectrum interest rate brought positive effects, and the company achieved better capital gains.
The non-performing assets showed a “double decline”, and the asset quality was stable and good. By the end of 2021, the balance of China Citic Bank Corporation Limited(601998) non-performing loans was 67.459 billion yuan, a quarter on quarter decrease of 2.898 billion yuan, the non-performing loan ratio decreased quarter by quarter, the quarter on quarter decrease of 9 BP to 1.39% at the end of 2021, and the asset quality showed a steady and positive trend; In terms of provisions, China Citic Bank Corporation Limited(601998) provision coverage decreased by 4.53pct to 180.0% month on month, but still increased by 8.39pct compared with the beginning of the year.
The capital adequacy ratio increased steadily as a whole China Citic Bank Corporation Limited(601998) adhere to the three light development strategy of “light assets, light capital and light cost”, guide operating institutions to reasonably manipulate the asset structure and improve the level of capital adequacy ratio under capital constraints. By the end of 2021, China Citic Bank Corporation Limited(601998) core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio were 8.85%, 10.88% and 13.53% respectively, with quarter on quarter changes of 0.05, -0.01 and -0.1pct respectively, up 0.11, 0.70 and 0.52pct respectively compared with the beginning of the year.
Earnings forecast, valuation and rating China Citic Bank Corporation Limited(601998) continuously promote the implementation of the new three-year plan (20212023). While the comprehensive financing service capacity for the public is continuously enhanced, the retail transformation is continuously promoted and the asset quality remains stable. In the future, considering that the “steady growth” policy is expected to continue to be introduced to promote the realization of this year’s economic growth target, we raised the company’s EPS forecast from 2022 to 2023 to 1.23 (up 3.4%) / 1.32 (up 3.9%) yuan, and the new EPS forecast for 2024 to 1.41 yuan. The current stock price corresponds to 0.39/0.36/0.33 times of Pb valuation from 2022 to 2024 respectively, maintaining the “overweight” rating.
Risk tip: if the macro economy goes down more than expected, it may increase the potential risk of large risk exposure.
