\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 988 Bank Of China Limited(601988) )
Core view
In 2021, the two-year average growth rate of net profit attributable to the parent company reached the highest value in recent seven years. In 2021, the annual revenue was 605.6 billion yuan, a year-on-year increase of 7.1%, with a growth rate of 0.8 percentage points higher than that in the first three quarters, mainly due to the contribution of the recovery of asset growth in the fourth quarter; The annual PPOP increased by 4.1% year-on-year, with a growth rate of 0.4 percentage points higher than that in the first three quarters; The annual net profit attributable to the parent company was 216.6 billion yuan, with a year-on-year increase of 12.3%. The annual net profit attributable to the parent company increased by an average of 7.5% in two years, up 6.3 percentage points from the first three quarters, which was basically consistent with the performance growth rate of the six industries disclosed by the CBRC. The two-year average growth rate in 2021 was the highest since 2014. 2021 weighted roe11 3%, up 0.7 percentage points year-on-year.
Assets grew steadily. In 2021, the total assets increased by 9.5% year-on-year to 26.72 trillion yuan, slightly higher than that in the previous period, but basically maintained near the industry average level. Among them, deposits increased by 7.5% year-on-year to 18.14 trillion yuan, and loans increased by 10.5% year-on-year to 15.67 trillion yuan; At the end of the year, the core tier 1 capital adequacy ratio was 11.30%, significantly higher than the regulatory standard.
Net interest margin bottoms out. The company’s annual average daily net interest margin was 1.75%, a year-on-year decrease of 10bps, mainly due to the decline in the yield of domestic RMB loans. However, the net interest margin has stabilized significantly since the interim report, so it is flat month on month. Among them, the annual loan yield decreased by 13bps year-on-year, and the deposit interest payment rate decreased by 6bps.
The net income from handling charges increased slightly. In 2021, the net income from handling charges increased by 7.8% year-on-year, mainly benefiting from the rapid growth of capital market conditions last year and the income from consignment funds and custody business.
Asset quality remains excellent and marginal improvement. The estimated NPL generation rate in 2021 is 0.61%, a year-on-year decrease of 11bps, which is not very obvious, mainly because the original NPL generation rate of the company is already very low. The provision coverage rate of the company at the end of the year reached 187%, which was 5 percentage points lower than that at the end of the third quarter and 10 percentage points higher than that at the beginning of the year. In addition, the non-performing rate of the company at the end of the year was 1.33%, an increase of 4bps compared with the end of the third quarter and a decrease of 13bps compared with the beginning of the year; The attention rate was 1.34%, 19 BPS lower than that in the interim report; Non performing / overdue 124%, an increase of 8 percentage points over the beginning of the year, and the recognition of non-performing is more strict.
Investment suggestion: we slightly adjusted the profit forecast according to the latest LPR adjustment and other factors. It is estimated that the net profit attributable to the parent company will be 231.5/244.2/256.1 billion yuan from 2022 to 2024, with a year-on-year growth rate of 6.9/5.5/4.9%; Diluted EPS is 0.79/0.83/0.87 yuan; The current share price corresponds to PE of 3.8/3.6/3.4x and Pb of 0.42/0.39/0.36x, maintaining the “buy” rating.
Risk tip: the weakening macroeconomic situation may have an adverse impact on the quality of bank assets.
