\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 166 Industrial Bank Co.Ltd(601166) )
Event: on March 24, Industrial Bank Co.Ltd(601166) released the annual report of 2021. The annual revenue / PPOP / net profit attributable to parent company reached 221236 billion, 163561 billion and 82.680 billion, with a year-on-year increase of 8.91% / 7.1% / 24.10% respectively. ROA and roe were 1.02% and 13.94%, with a year-on-year increase of 0.12 and 1.32pct respectively. Comments are as follows:
The high growth of non interest net income has driven the rapid growth of revenue. Thanks to the rapid growth of non interest income, the company’s revenue increased by 8.91% year-on-year in 2021, maintaining a rapid growth; Net profit increased by 24.1% year-on-year. The annual net non interest income reached 75.557 billion, with a year-on-year increase of 26.73%, accounting for 34.15% of revenue, with a year-on-year increase of 4.8pct. Among them, the net income from handling fees and commissions was 42.68 billion, a year-on-year increase of 13.18%; Other non interest net income was 32.877 billion, a year-on-year increase of 50.04%. In addition, the net interest income was 145679 billion, a year-on-year increase of 1.5%, and the growth rate decreased compared with last year; It is mainly related to the slight year-on-year decline of net interest margin and the relative slowdown of table expansion.
The asset liability structure was optimized, and the net interest margin decreased slightly year-on-year. Affected by the policy orientation of the real economy and the fierce competition in the deposit market, the Industrial Bank Co.Ltd(601166) net interest margin decreased by 7bp to 2.29% year-on-year in 2021. The company actively hedges external negative impacts through asset liability structure adjustment. On the asset side, we increased the investment of high-yield credit assets. During the year, the proportion of the average daily loan scale in interest bearing assets increased by 3.18pct to 58.64% year-on-year; The rate of return on loans and the rate of return on interest bearing assets decreased by 27bp 11bp respectively year-on-year. Optimize the debt structure and optimize the deposit structure; The interest payment rate of deposits and interest bearing liabilities decreased by 4bp 2bp year-on-year respectively.
Looking forward to 2022, due to the continuous decline of LPR, it is difficult to raise the price of newly issued loans, and the deposit cost is relatively rigid. It is expected that the net interest margin will face some narrowing pressure. However, the company has room to optimize its structure, and the proportion of corporate loans and retail loans to emerging industries is expected to further increase; Wealth management and “investment bank + Commercial Bank” are expected to bring more low-cost deposits to customers. The net interest margin is expected to remain basically stable.
The non-performing balance and non-performing rate have both decreased, and the risk in the real estate field is controllable. By the end of 2021, the company’s non-performing loan balance was 48.714 billion, a decrease of 942 million compared with the end of the previous year; The non-performing loan ratio was 1.10%, down 0.15pct from the end of the previous year, and the overall asset quality continued to improve. The indicators of concern and overdue increased slightly compared with the end of the previous year, mainly due to the adjustment of the recognition standard of overdue credit cards. The risks in the real estate sector are basically controllable. The balance of loans, bonds and non-standard investments in the real estate sector is about 1.65 trillion, with a non-performing rate of 1.34%. Among them, personal mortgage loans account for about 68%, mainly distributed in the first and second tier cities and economically developed core areas, with low risk. For public real estate financing customers, the project is excellent, the mortgage rate is high, the provision coverage is sufficient, the economy of the distribution area is good, the overall risk is controllable, and the risk offset ability is strong. The provision coverage ratio and loan allocation ratio increased, and the risk offset ability was enhanced. The provision coverage ratio increased by 49.9pct to 268.73% compared with the end of the previous year, and the loan allocation ratio increased by 0.22pct to 2.96% compared with the end of the previous year. It is worth noting that the “allocation ratio of non-standard assets” is 6.09%, which has reached a high level in recent years, even higher than the provision level of credit assets, and the provision for full caliber assets is sufficient.
The three business cards of “green bank, wealth bank and investment bank” are bright Industrial Bank Co.Ltd(601166) adhere to the transformation direction of “light assets, light capital and high efficiency”, take “commercial bank + investment bank” as the strategic core, focus on breaking through the three business cards of “green bank, wealth bank and investment bank” and continue to integrate. Comprehensive and diversified operation is expected to drive the acceleration of light transformation.
Green Bank: long-term cultivation, highlighting the advantages of green gold brand and fully benefiting from policy dividends Industrial Bank Co.Ltd(601166) green finance business started early and has established a comprehensive service system. By the end of the 21st century, the financing balance of green finance was 1.39 trillion, an increase of 19.98% over the end of the previous year; Among them, the balance of green loans meeting the criteria of the central bank was 453.94 billion, an increase of 42.11% over the end of the previous year; Benefit from the policy dividend of carbon emission reduction support tools. Optimistic about the company’s comprehensive financial service experience and competitive advantage accumulated for many years in the field of green finance.
Wealth Bank: the wealth management ecosystem has been continuously improved, and retail AUM and medium income have increased rapidly. The company continues to improve its own financial management, trust, fund and other asset management product systems, and broaden cooperation with peers in product creation and sales channels; At the same time, build an open wealth management ecosystem to provide customers with more diversified investment choices. By the end of the 21st century, AUM of retail customers had reached 2.85 trillion, a year-on-year increase of 9.01%; The income of fortune bank reached 23.394 billion, a year-on-year increase of 13.17%.
Investment banking: the construction of investment banking ecosystem has achieved remarkable results Industrial Bank Co.Ltd(601166) integrate all business units within the group and cooperate with external institutions to jointly build an “investment banking ecosystem” and comprehensively use diversified tools to meet the needs of enterprises in investment, financing and trading. By the end of the 21st century, the balance of off balance sheet non-traditional corporate financing was 2.71 trillion, an increase of 33.21% over the end of the previous year, significantly faster than the growth rate of other assets; In the whole year, the income from investment banking business reached 4.529 billion, a year-on-year increase of 12.61%.
Investment suggestion: Industrial Bank Co.Ltd(601166) 2021 has a bright performance growth, continuous improvement of asset quality and “three business cards”. Optimistic about the growth potential of non interest income brought by the continuous promotion of the “commercial bank + investment bank” strategy, the company is expected to achieve a lighter business model and higher profitability. It is estimated that the net profit attributable to the parent company in 2022 and 2023 will increase by 15.4% and 15.0% respectively year-on-year, and the corresponding BVPs will be 33.31 and 38.67 yuan / share respectively. Considering the strategic positioning advantage and the high growth attribute brought by the comprehensive financial potential, the company is given a double of the 2022 Pb target valuation, corresponding to the share price of 33.31 yuan, maintaining the “strongly recommended” rating.
Risk tip: the economic stall and downturn lead to the deterioration of asset quality; Unexpected changes in regulatory policies, etc.
