\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 166 Industrial Bank Co.Ltd(601166) )
Matters:
Industrial Bank Co.Ltd(601166) released the 2021 annual report. In 2021, the annual operating revenue was 221.2 billion yuan, with a year-on-year increase of 8.91%, and the net profit attributable to the parent company was 82.7 billion yuan, with a year-on-year increase of 24.1% and roe13.5% 9%, up 1.32 PCT from last year. At the end of the year, the total assets were 8.60 trillion yuan, an increase of 8.98% over the end of the previous year. The profit distribution plan of the company in 2021 is: it is proposed to distribute a cash dividend of 10.35 yuan (including tax) for every 10 ordinary shares, with a dividend rate of 26.0%.
Ping An View:
Profits continued to release, and investment income drove the revenue upward Industrial Bank Co.Ltd(601166) 2021 saw a year-on-year increase of 24.1% (vs + 23.4%, 21q1-3) in the net profit attributable to the parent company, and a year-on-year increase of 6.7% in the profit before provision. With the release of provision flexibility driven by the improvement of asset quality, the profit growth of the company reached a higher level. In terms of split revenue, Societe Generale’s annual revenue continued to increase by 0.8 percentage points to 8.9% compared with the third quarter. We believe that the improvement is mainly due to the recovery of investment income at the end of the year. The company’s investment income in 2021 increased by 8.9% year-on-year (vs-31.1%, 21q1-3), which has become the main influencing factor supporting the upward growth of revenue, which also fully reflects Societe Generale’s advantages in the financial industry sector. In other aspects, the growth rate of the company’s net interest income improved slightly, with a year-on-year increase of 1.5% (vs + 0.8%, 21q1-3), and the growth rate of handling charges in the whole year was 13.2% (vs + 26.3%, 21q1-3), which was lower than that in the first three quarters. Specifically, the growth rate of investment banking revenue slowed compared with the first half of the year, with a year-on-year increase of 12.6% (vs + 45.3%, 21h). In the wealth management sector, Societe Generale achieved remarkable transformation and outperformed comparable peers. The annual financial management and commission charges increased by 24.6% (vs + 44.0%, 21h) year-on-year, of which the income of commission funds increased by 104% year-on-year.
The asset side dragged down the interest margin, and the deposit structure continued to be optimized. Societe Generale’s annual net interest margin was 2.29% (vs 2.32%, 21h), down 7bp year-on-year. We believe that the narrowing of the company’s interest margin was mainly dragged down by the downward pricing of the asset side. The average yield of interest bearing assets was 4.36%, down 11bp year-on-year, of which the average yield of loans decreased by 27bp to 5.03% compared with 20 years, which is consistent with the overall trend of the industry. The cost of the liability side decreased steadily. The average cost rate of interest bearing liabilities was 2.29%, a year-on-year decrease of 7bp. Among them, the deposit cost improved significantly, and the deposit cost rate decreased by 4bp to 2.22% year-on-year, mainly due to the pressure drop of the cost of time deposits, and the cost rate of corporate / personal time deposits decreased by 7bp / 9bp to 3.03% / 3.68% year-on-year.
At the end of 2021, the total assets of the company increased by 9.0% (vs + 11.5%, 21q3) year-on-year, slower than Q3. The loan expanded steadily. At the end of 2021, the total loan increased by 11.7% year-on-year, and the year-on-year growth rate was the same as Q3. In the loan structure, retail loans accounted for 42.5%, an increase of 0.15pct compared with the end of June. We judge that it is mainly due to the increased investment of personal business loans, and the proportion in retail loans increased by 1.85pct to 10.8% compared with the end of June. On the liability side, the year-on-year growth rate of deposits at the end of 2021 was 6.6% (vs + 6.2%, 21q3), and the deposit structure was optimized in many aspects. The demand rate of deposits at the end of 2021 was 41.0%, up 1.1pct year-on-year, while the proportion of retail deposits increased by 0.43pct to 18.4% compared with 20 years.
The non-performing rate decreased month on month, and the provision coverage level was further improved. The non-performing rate of the company at the end of 2021 was 1.10%, with a decrease of 15bp / 2bp on a month on month basis, which was the best level in the past six years. Among them, the non-performing rate of personal loans was 1.01%, a decrease of 0.03 percentage points compared with the end of the previous year. We estimate that the annual non-performing rate of the company is 0.76%, a decrease of 56bp compared with 20 years, and the pressure margin of asset quality is improved. However, it should be noted that in terms of forward-looking indicators, the company’s concern rate at the end of 2021 was 1.52% (vs1.47%, 21q3), up 15bp year-on-year. In addition to the impact of adjustment factors of credit card confirmation caliber, some risk trends in the public sector need to be observed. At the end of 2021, the provision coverage rate of the company was 269%, with a year-on-year increase of 50pct, and the allocation loan ratio was 2.96%, with a year-on-year increase of 22bp. The overall provision coverage level remained abundant and the risk offset ability was further enhanced.
Investment suggestion: maintain excellent profitability and continue to be optimistic about the valuation and repair space. The company’s system and mechanism are flexible. Focusing on the layout of “commercial banks + investment banks”, the company continues to promote business transformation in the direction of light capital, light assets and high efficiency. At present, the company’s on balance sheet and off balance sheet businesses have developed in a balanced way, and roe has always been in the forefront of joint-stock banks. In 2021, the company proposed to build three golden business cards of green bank, fortune bank and investment bank in the future. We are optimistic about the long-term development space of relevant tracks. Considering the marginal rise of economic downward pressure, we slightly lowered the company’s 22-year and 23-year profit forecasts and added a 24-year profit forecast. It is estimated that the company’s EPS in 2022 / 2023 / 2024 will be 4.57/5.22/5.88 yuan respectively (the original 2022 / 2023 forecast value is 4.59/5.27 yuan respectively), and the corresponding profit growth rate will be 14.8% / 14.2% / 12.6% (the original 2022 / 2023 forecast value is 15.2% / 14.9% respectively). At present, the company’s share price corresponds to 0.62x/0.56x/0.49x Pb in 2022, 2023 and 2024 respectively, with sufficient margin of safety and maintaining the rating of “strongly recommended”.
Risk tips: 1) macroeconomic downturn leads to higher pressure on industry asset quality than expected; 2) The strength of financial supervision increased more than expected; 3) The escalation of Sino US friction has led to an increase in external risks.
