By the end of this week, six state-owned banks + joint-stock banks ( Bank Of Communications Co.Ltd(601328) , China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) , Industrial Bank Co.Ltd(601166) , China Citic Bank Corporation Limited(601998) , China Everbright Bank Company Limited Co.Ltd(601818) ) had disclosed their annual reports or held performance meetings. We sorted out hot issues such as real estate, retail (credit card, etc.) and credit investment and release.
Real estate: the non-performing assets have been exposed, but they have been actively managed and controlled, and the relevant provisions have been fully withdrawn.
1. Scale: four joint-stock banks (except China Everbright Bank Company Limited Co.Ltd(601818) disclosed the scale of on balance sheet and off balance sheet risky and non risky assets of real estate at the end of 2021, and some banks are gradually reducing the relevant scale. 1) Businesses in the table that undertake credit risk to the public (involving credit, proprietary bonds and non-standard investment): a. the proportion of the overall scale is relatively limited. Among them, Ping An Bank Co.Ltd(000001) accounts for 6.93% of the total assets, and the remaining three banks are basically about 5% ( China Merchants Bank Co.Ltd(600036) 5.53%, Industrial Bank Co.Ltd(601166) 4.67%, China Citic Bank Corporation Limited(601998) 4.94%). B. Corporate loans: Ping An Bank Co.Ltd(000001) corporate loans amount to nearly 290 billion yuan, accounting for 9.43% of the total loans; Followed by Industrial Bank Co.Ltd(601166) (accounting for 7.61%) and China Merchants Bank Co.Ltd(600036) (7.21%) Bank Of Communications Co.Ltd(601328) , China Everbright Bank Company Limited Co.Ltd(601818) and China Citic Bank Corporation Limited(601998) account for about 6%, which is relatively small. 2) Off balance sheet businesses that do not bear credit risk (financial capital contribution, entrusted loan, cooperative agency management, consignment trust and fund, lead underwriting of debt financing instruments, etc.): China Merchants Bank Co.Ltd(600036) scale is high (RMB 412.1 billion), but the proportion of total assets is only less than 4.5%, and it is shrinking, down from 106.9 billion at the beginning of the year, of which two-thirds are financial capital investment, trust and other private products Ping An Bank Co.Ltd(000001) , Industrial Bank Co.Ltd(601166) and China Citic Bank Corporation Limited(601998) scale accounted for 2.45%, 1.51% and 1.51% respectively ( China Citic Bank Corporation Limited(601998) off balance sheet scale was also reduced by 34.2 billion yuan compared with the beginning of the year).
2. Risk exposure: the bad debt increased slightly, but the provision was sufficient, and most of the projects were mainly in the first and second tier cities. 1) With the rise of industrial risks, there is a certain exposure to non-performing loans: A. corporate loans on the balance sheet: the non-performing rate of corporate real estate of the five joint-stock banks has increased by a certain proportion compared with the end of the previous year, China Citic Bank Corporation Limited(601998) the highest non-performing rate is 3.63%, the rest are below 1.5%, and China Merchants Bank Co.Ltd(600036) , China Everbright Bank Company Limited Co.Ltd(601818) , Industrial Bank Co.Ltd(601166) and Ping An Bank Co.Ltd(000001) are 1.41%, 1.23%, 1.08% and 0.22% respectively. The Bank Of Communications Co.Ltd(601328) non-performing rate was 1.25%, down 0.1pc from the end of the previous year, and the risk was well controlled. B. Off balance sheet business: some consignment businesses involve breach of contract, such as China Merchants Bank Co.Ltd(600036) trust and other products, involving China Fortune Land Development Co.Ltd(600340) and some projects of Evergrande group; And Ping An Bank Co.Ltd(000001) related to Baoneng, China Fortune Land Development Co.Ltd(600340) and other businesses in breach of contract, but has actively implemented the obligations of the agent and urged the issuer to deal with risks. 2) All banks have responded to risk exposure in advance and made sufficient provision China Merchants Bank Co.Ltd(600036) and China Citic Bank Corporation Limited(601998) real estate industry’s loan allocation ratio is more than twice that of the whole, which is expected to exceed 8% and 6% respectively Industrial Bank Co.Ltd(601166) the provision coverage of public real estate financing is 305.14%, which is higher than the overall provision coverage of the company by 36pc. 3) The project has good qualification and sufficient mortgage. More than 80% of the real estate projects of banks are concentrated in the first and second tier cities, and most of them are fully mortgaged. For example, China Merchants Bank Co.Ltd(600036) pure credit projects account for only 1.4%, and are mainly class a high-quality customers. The value of more than 80% of the projects covers more than 1.5 times of the financing. All banks have conducted a comprehensive investigation on real estate projects, and the corresponding risk control policies have been actively adjusted, such as customer white list system, classified and hierarchical credit, one policy control for one household, etc.
3. Bank’s Thoughts on real estate business in the future: 1) for the public: high-quality real estate companies will still actively cooperate, such as participating in M & A loans, which will help resolve industry risks. For example, the company has signed a 10 billion yuan strategic M & a cooperation agreement with Wumei Real Estate Co., Ltd. 2) Mortgage: Recently, due to insufficient demand, the growth is relatively weak. In the future, we will pay close attention to the sales of first-hand and second-hand houses.
Retail: it will still focus on delivery in the future. The caliber adjustment will affect the overdue indicators of credit cards, which fluctuate to a certain extent, but the trend in the 21st year is still good as a whole.
1. Asset quality: there are certain fluctuations in credit cards. The overall retail non-performing rate of each bank remains relatively stable, and some banks have improved (among them, the retail non-performing rates of Bank Of Communications Co.Ltd(601328) and China Merchants Bank Co.Ltd(600036) are only 0.84% and 0.81%, the lowest among the above banks). Due to the regulatory provisions, all banks have advanced the recognition time of overdue credit cards in Q4 ( China Merchants Bank Co.Ltd(600036) has been adjusted in the third quarterly report), and the relevant indicators of overdue credit cards have been improved to a certain extent. However, excluding this factor, China Merchants Bank Co.Ltd(600036) , Industrial Bank Co.Ltd(601166) all indicate that the overall trend of credit card asset quality is improving, and the generation rate of non-performing loans and the amount of new non-performing loans have decreased significantly year-on-year.
2. Investment: the proportion of retail loan increment of six banks in loan increment in 2021 was 49.8%, an increase of 0.44pc over last year. Among them, new mortgages accounted for 19.1% of the loan increment. Constrained by the concentration management, the proportion of consumer loans decreased by 7.6pc compared with last year, while the proportion of consumer loans increased. For example, the proportion of new credit cards accounted for 10.22% of the loan increment, which increased by nearly 7pc compared with last year (affected by the epidemic in the past 20 years, the growth rate of credit cards was weak). In 2022, it is expected that retail loans will still be the focus of banks’ investment. Some banks have taken relevant measures to promote scale growth, such as China Merchants Bank Co.Ltd(600036) implementing the low price policy for high-quality credit card customers (interest rate 6% – 9%), and increasing the order products (automobile installment, etc.).
For Q1, the credit card business still performed well from January to February, Ping An Bank Co.Ltd(000001) the credit card revenue increased by 20% in the first two months, China Merchants Bank Co.Ltd(600036) asset quality was also in a relatively stable trend. We expect that the epidemic has occurred repeatedly since March, which may have a certain fluctuation on the asset quality of the whole industry. However, referring to the epidemic in the past 20 years, it is expected that the risk is controllable, and some banks (such as China Merchants Bank Co.Ltd(600036) and Ping An Bank Co.Ltd(000001) ) have strengthened the expansion and marketing of high-quality credit card customers, and the impact is expected to be relatively limited.
Credit demand and planning: banks have made a good start and are progressing smoothly. Under the background of stable growth in the future, the demand is expected to be released gradually.
1) in terms of total amount: the annual credit increment of each bank in 2022 is no less than that in 2021, which is consistent with the trend of our preliminary research.
Considering that the two sessions have made it clear to “expand the scale of new loans” this year, it is expected that the loan investment of the whole industry this year will not be less than 20 trillion (the scale in 2021), which will form a strong support for social finance in 2022. Credit demand in some regions (Yangtze River Delta, etc.) is relatively strong. For example, Bank Of Communications Co.Ltd(601328) focuses on the strategic development of the Yangtze River Delta, and credit grew rapidly in the first two months. 2) Direction of investment: for the public, it is expected that new infrastructure and traditional infrastructure, green finance and manufacturing (especially emerging industries) will be the focus of investment. In terms of retail, banks still maintain a high degree of investment. The two leading banks ( China Merchants Bank Co.Ltd(600036) and Ping An Bank Co.Ltd(000001) ) are expected to increase retail investment by more than 60%. In addition, Bank Of Communications Co.Ltd(601328) and Industrial Bank Co.Ltd(601166) will also increase the proportion of retail. 3) In terms of demand, some joint-stock banks reflect that the current credit demand is not very strong, which is consistent with the trend of bill interest rate tracking. Since March, the interest rates of three-month state-owned banks + joint-stock banks and urban commercial banks are 1.90% and 2.07% respectively, down 22bps and 24bps respectively month on month, reflecting the relatively weak credit demand. For the future, it is expected that with the gradual implementation of China’s steady growth, the demand of the real economy is expected to be gradually released.
Net interest margin: there will still be pressure in 2022, but the range is expected to narrow. Banks will actively optimize the asset negative structure and maintain the stability of interest margin. This is basically consistent with the trend of our previous research. On the asset side, the downward LPR still has a certain pressure on the loan interest rate; On the liability side, banks have fierce competition for core deposits and deposit costs are relatively rigid, but it is expected that the dividends released by the deposit self-discipline pricing mechanism will still form a certain hedge. At the same time, the bank also said that it would strive to maintain the stability of interest rate spread through structural optimization, such as asset side, and increase the proportion of retail loans; On the liability side, strengthen the precipitation of low-cost settlement deposits. This will depend on the operating ability of each bank to customers. It is expected that the performance of interest margin will still be differentiated. For banks with strong comprehensive operating ability of customers, the net interest margin can still remain better than that of peers.
Regular data tracking:
Equity market tracking: 1) trading volume: the average daily turnover of stocks this week was 952.7 billion yuan, a decrease of 158.7 billion yuan month on month. 2) Liangrong: the balance was 1.68 trillion yuan, an increase of 0.33% over last week. 3) Fund issuance: non monetary funds issued 22.468 billion shares this week, an increase of 7.326 billion month on week. Since March, a total of 92.995 billion shares have been issued, a year-on-year decrease of 175494 billion. Among them, the stock type was 4.471 billion, a year-on-year decrease of 30.36 billion, and the hybrid type was 31.454 billion, a year-on-year decrease of 145706 billion.
Interest rate market tracking: 1) interbank certificates of deposit: A. volume: according to wind data, the issuance scale of interbank certificates of deposit this week was 0.51 trillion yuan, a decrease of 0.12 trillion yuan compared with last week; Since March, the issuance scale of interbank certificates of deposit has been 2.09 trillion yuan, and the current balance of interbank certificates of deposit is 14.48 trillion yuan, an increase of 58.3 billion yuan compared with the end of last month; B. Price: the issuing rate of interbank certificates of deposit this week was 2.54%, up 1bp from last week; So far this month, the issue interest rate is 2.54%. 2) Bill interest rate: this week, the 3-month discount rate of bank notes of large state-owned banks + joint-stock banks was 1.87%, up 7bps from last week; Since March, the interest rate has been 1.90%, down 22bps from last month. The three-month bank note discount rate of urban commercial banks was 2.00%, up 3bps from last week. Since March, the interest rate has been 2.07%, down 24bps from last month. 3) Yield of 10-year Treasury bonds: the average yield of 10-year Treasury bonds this week was 2.82%, up 3bps from last week. 4) Issuance scale of local government special bonds: 120676 billion new special bonds were issued this week, a decrease of 5.977 billion month on week. Since the beginning of the year, a total of 1.30 trillion bonds have been issued, and the amount of local bonds approved in advance in 2022 was 1.46 trillion.
Risk tip: the risks of real estate enterprises erupted intensively, the steady growth policy was less than expected, and the macro-economy went down; The promotion of capital market reform policy is less than expected; The sales of guaranteed products of insurance companies were lower than expected.
