\u3000\u3 China Vanke Co.Ltd(000002) 839 Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) )
Event:
On March 28, Zhangjiagang bank released its 2021 annual report. The annual operating revenue was 4.616 billion yuan, yoy + 10.1%, and the net profit attributable to the parent company was 1.304 billion yuan, yoy + 30.3%. The weighted average return on net assets was 11.08%, yoy + 1.93pct.
Comments:
The performance maintained high growth, 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 were + 10.1% and + 30.3% respectively, with changes of – 0.6 and 3.3pct respectively compared with 1-3q21. Among them, the year-on-year growth rates of net interest income and non interest income were + 2.5% and + 55.8% respectively, with decreases of 0.1 and 7.4pct respectively compared with 1-3q21. Split the year-on-year growth structure, with asset scale expansion and non interest income as the main contribution sub items, driving the performance growth rate of 53.1 and 32.3pct respectively; On a month on month basis, the annual performance growth of the company maintained a high growth, mainly benefiting from the continued strong performance of the non interest end in the fourth quarter.
In the fourth quarter, the speed of table expansion slowed down and the proportion of loans further increased. At the end of 2021, the total assets of the company increased by 14.4% compared with the end of the previous year, and the growth rate decreased by 3.8pct compared with the end of 21q3. Among them, the new assets in the fourth quarter were 3.178 billion yuan, a year-on-year decrease of 4.128 billion yuan. The expansion of the company’s statement in the fourth quarter was weakened, which was a drag on the net interest income. Structurally, 21q4 credit expansion slowed down, but it is still the main allocation direction. In the fourth quarter, new loans accounted for 70.4% of new interest bearing assets, and the proportion of stock loans in interest bearing assets increased by 0.2pct to 61.0% compared with the end of the previous quarter. The asset structure was further optimized.
The credit structure is inclined to high priced varieties. In the past 21 years, the company’s new loans increased by 14.961 billion, an increase of 1.512 billion year-on-year. The focus of credit resources was on retail credit, and the investment in corporate loans was also increased; According to the way of guarantee, the company has increased the expansion of high priced varieties of credit. The newly increased loans to the public sector and the manufacturing sector accounted for more than 1.09 billion and 3.49 billion respectively, accounting for 3.49% and 3.8% year-on-year respectively; 2) Retail credit increased by 9.729 billion, an increase of 724 million year-on-year. The proportion of stock retail credit in interest bearing assets increased by 3.6 and 0.6pct respectively compared with the beginning of the year and the end of the previous quarter. The new personal loans mainly focused on personal business loans, and the credit card investment was also increased. The two increased by 6.010 billion and 1.779 billion respectively, an increase of 334 million and 1.190 billion respectively year-on-year, of which the proportion of business loans in personal loans increased by 0.7 PCT compared with the beginning of the year; 3) Credit loans increased by 5.024 billion, accounting for 33.6% of the new loans in the whole year, an increase of 2.395 billion over the previous year, with a corresponding year-on-year growth rate of 68.8%.
The growth of deposits slowed down in the fourth quarter, and the proportion of market liabilities increased. At the end of 2021, the growth rates of the company’s total liabilities and deposits were 13.2% and 13.0% respectively, down 4.2 and 1.9 PCT respectively compared with the end of the previous quarter. Structurally, the proportion of deposits, bonds payable and interbank liabilities in interest bearing liabilities was 84.3%, 5.7% and 10.0% respectively, with changes of – 0.5, – 1.8 and 2.2pct respectively compared with the end of 21q3. The growth rate of deposits of the company slowed down in the fourth quarter, and the proportion of deposits decreased compared with the end of the previous quarter, but still increased by 1.2pct compared with the beginning of the year.
The asset side yield rose, and the interest rate spread remained strong and resilient. In 2021, under the background of fee reduction and profit transfer and insufficient effective demand of the real economy, the asset side pricing of the banking industry was under pressure, while the company realized the upward return against the trend by expanding the asset side to high priced varieties such as credit loans. In 2021, the return on interest bearing assets was 4.69%, an increase of 9bp compared with 1h21. The cost ratio of the company’s interest bearing liabilities also increased, but thanks to the effective hedging of asset side pricing, the company’s annual interest margin maintained strong toughness, with 1q21, 1h21, 1-3q21 and 2021 net interest margins of 2.46%, 2.41%, 2.45% and 2.43% respectively, showing a stable operation trend.
Non interest income achieved good performance, mainly supported by agency financial management business and investment income. In 2021, the company’s non interest income increased by 55.8% year-on-year to 925 million yuan. Among them, the net fee and commission income reached 124 million yuan, while the net loss in the same period of last year was 10 million yuan, mainly due to the increase in the income of agency financial management business; Net other non interest income increased by 32.7% year-on-year to RMB 801 million, mainly driven by the high year-on-year increase in investment income. Benefiting from the revaluation of bond asset value caused by the decline of bond market yield, the company achieved better capital gains.
The non-performing loan ratio remained below 1%, and the provision coverage rate rose to 475.4%. By the end of 2021, Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) NPL ratio was 0.95%, which increased by 1bp quarter on quarter, but still decreased by 22bp compared with the beginning of the year, and remained below 1% in the second half of 2021; The concern rate decreased 4bp quarter on quarter to 1.61%, and the overall trend was stable. With the overall improvement of asset quality, Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) provision policy remained prudent and prudent, and the ability of risk offset was further enhanced. By the end of 2021, Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) provision coverage and loan allocation ratio were 475.4% and 4.49% respectively, and the quarter on quarter ratio increased by 23.7 and 0.2pct respectively. The margin of safety was relatively abundant, ranking in the forefront among listed banks.
The capital adequacy ratio increased steadily. By the end of 2021, Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio were 9.82%, 11.53% and 14.30% respectively, with quarter on quarter changes of 0.23, 0.20 and -0.22pct respectively Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) pay attention to the endogenous growth of capital and make rational use of external financing to further strengthen capital strength. By the end of 2021, 2.497 billion yuan of convertible bonds had not been converted into shares. With the steady progress of the conversion, it is expected to further thicken the core Tier-1 capital and lay a solid foundation for the scale expansion of the asset side.
Earnings forecast, valuation and rating Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) always adhere to the strategic positioning of deeply cultivating local areas and serving regions, focus on the field of personal operational loans, further sink the company’s micro loan business, the differentiation of customer group structure and the specialization of credit services will promote the continuous improvement of the company’s micro loan business scale and profit contribution. At the same time, the company’s asset quality performance is very excellent. Under the condition that the asset quality continues to improve, the company still maintains a prudent provision policy, which creates conditions for the release of performance and the stabilization of the audit rate. 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 EPS forecast for 20222023 to 0.82 (up 1.2%) yuan / 0.93 (up 1.1%) yuan, increased the EPS forecast for 2024 to 1.05 yuan, and the current Pb valuation corresponding to the stock price is 0.80/0.73/0.66 times, maintaining the “buy” rating.
Risk tip: if the economic recovery is less than expected, the bank’s credit demand may weaken, and the asset quality may also be under pressure; Financial service institutions are all over Jiangsu, Zhejiang and Shanghai, and the pressure of peer competition is increasing, which may affect the operating performance.
