On March 29, the first annual report performance conference of the four major state-owned banks was held, and BOC took the lead in announcing the “report card”.
As the first performance report of the four major state-owned banks in 2021, BOC’s operating performance last year was brilliant, which was closely related to the overall good macroeconomic performance last year. Last year, the operating revenue of BOC exceeded 600 billion yuan for the first time, reaching 605.56 billion yuan, a year-on-year increase of 7.08%; The net profit attributable to the parent company was 216.56 billion yuan, a year-on-year increase of 12.3%.
On the same day, the 2021 performance announced by China Construction Bank Corporation(601939) also showed a steady increase in profits. Last year, CCB achieved a revenue of 824.25 billion yuan, a year-on-year increase of 9.05%; The net profit was 302.51 billion yuan, an increase of 11.6% over the previous year.
However, in the face of the “triple pressure” facing the current economy and its impact on the operating performance of Bank Of China Limited(601988) industry this year, at the performance conference held that day, Bank of China President Liu Jin believed that in order to maintain the economic operation within a reasonable range and promote the steady and healthy development of the capital market, a series of important measures were deployed and issued at the recent national standing committee meeting and the financial committee meeting. “These measures are like a strong ‘spring breeze’, warming the development environment, boosting market confidence and providing a good environment for the development of Bank Of China Limited(601988) industry. Bank of China not only takes advantage of the ‘spring breeze’ of policies, but also hopes to take the initiative to ‘create wind’ for economic development, maintain a moderate increase in new loans and serve the recovery of the real economy.”.
The president “platform” the bank’s stock, calling for firm confidence
With regard to the dividend distribution concerned by the market, BOC announced on the same day that it plans to distribute the cash dividend of ordinary shares at 2.21 yuan (before tax) per 10 shares. The distribution time of A-share dividend is expected to be July 15, 2022 and H-share dividend is expected to be August 10, 2022. The profit distribution plan needs to be submitted to the bank’s 2021 annual general meeting for deliberation and approval. The board of directors of CCB proposed to pay an annual cash dividend of RMB 0.364 per share (including tax).
“In 2021, the annual average price of Bank Of China Limited(601988) a shares was 2.81 yuan, with a dividend of 0.221 yuan per share. Based on this calculation, the dividend yield was 7.86%, an increase of 2.08 percentage points over the previous year.” Liu Jin said that the dividend ratio of 30% determined by our major shareholders has remained unchanged for many years and will not change without special circumstances.
Regardless of the dividend level of 30% or the dividend rate of 7.86%, Liu Jin believes that although this income level is not high for institutional investors, it is a stable and reliable investment choice under the current complex situation and environment; For individual investors, BOC shares, as part of the asset portfolio, have been a good choice. Financial products, fixed investment funds and other investment tools, if individual investors choose, can reach this level, is also very good. BoC will continue to maintain its current dividend level.
although the dividend rate of large state-owned banks can bring relatively stable dividend returns to shareholders, the valuation has been low for many years. At the end of the press conference, Liu Jin was the “platform” for BOC shares and called on investors to have firm confidence in BOC shares
\u3000\u3000 “I strongly suggest that investors and analysts should not only look at the stock price, but also the dividend, the growth and growth of the capital market, but also our stability; we should not only see the market-oriented characteristics of Bank Of China Limited(601988) as a commercial bank, but also see the institutional advantages of socialism with Chinese characteristics, and have firm confidence in Bank Of China Limited(601988) this stock. Let’s work together to stabilize the capital market and stabilize the overall economic market 。” Liu Jin said.
Revenue to a new level, “uncover” the credit supply structure in the beginning of the year
talking about the quality of operation last year, Liu Jin believed that the performance of BOC was stable and good in the past year, mainly showing three characteristics:
First, the operating income has reached a new level, breaking the 600 billion yuan mark. Last year, the decline in net interest margin was effectively curbed. Since the second half of the year, the net interest margin has remained stable, which strongly supports the steady growth of operating revenue.
Second, the income structure has improved significantly. Last year, the group achieved non interest income of 180.6 billion yuan, a year-on-year increase of 19.01%. The proportion of non interest income in operating income increased by 3.08 percentage points to 29.81%.
Liu Jin revealed that Lin Jingzhen, vice president of BOC, who was once in charge of corporate business, has “moved to” the retail field since last year. Thanks to his working experience in corporate business, BOC has further strengthened the linkage between corporate and retail since last year, playing an important role in promoting the development of wealth management, private banking and other sectors.
Third, the operating efficiency has been gradually improved. The ROA (average return on total assets) reflecting profitability was 0.89%, an increase of 0.02 percentage points over the end of the previous year; Roe (return on net assets) was 11.28%, an increase of 0.67 percentage points over the end of the previous year.
The annual report shows that in 2021, BOC’s domestic RMB loans increased by 1.38 trillion yuan over the beginning of the year, with a record increase. It is worth noting that at the press conference, BOC also released the relevant data of credit supply in the first two months of this year, which was relatively rare in the previous annual performance press conference, releasing the positive signal that there are large banks abroad to stabilize credit supply and help steady economic growth.
Wang Zhiheng, vice president of BOC, revealed at the meeting that as of the end of February 2022, the loan balance of BOC domestic RMB generalized companies had reached 7481.6 billion yuan, an increase of 368.9 billion yuan over the beginning of the year, an increase of 47.2 billion yuan year-on-year, with a growth rate of 5.19% over the beginning of the year.
By industry, corporate green loans increased by 8.6% over the beginning of the year, loans for strategic emerging industries increased by 11.6%, and medium and long-term loans for manufacturing increased by 6.9%. In terms of subregions, BOC has actively implemented the development strategy of national key regions, and the new loans in Beijing Tianjin Hebei, Yangtze River Delta, Dawan district and other regions account for more than 70%.
“The first quarter is coming to an end. We have been making active efforts to maintain the moderate growth of new loans. I believe you will see a satisfactory result in the first quarter report. In helping the steady economic growth, we hope to achieve the steady growth of our assets, liabilities and financial benefits.” Liu Jin said.
For this year’s credit plan, Wang Zhiheng said that this year, BOC will meet the requirements of building a new development pattern and continue to expand the scale of new loans. It is expected that domestic RMB loans will increase year-on-year, with an increase of no less than 10%. We will continue to optimize the credit supply structure, continue to increase support for small and micro enterprises, scientific and technological innovation, green development and other key areas, and reasonably control the “two high and one surplus” credit supply. In addition, in terms of personal loans, adhere to the principle of “housing, housing and non speculation”, and invest appropriately on the premise of meeting the regulatory requirements to meet the reasonable housing needs of property buyers; Actively connect with the new consumption development model and realize the balanced development of personal loans and corporate loans.
Pay close attention to multi field risks, and the non-performing exposure or lag of Pratt Whitney small and micro loans
Last year, the non-performing loans of BOC achieved “one rise and one fall”, the overdue loan balance and overdue rate “both fell”, and the scissors difference between overdue and non-performing loans continued to be negative.
According to the annual report, the balance of non-performing loans of BOC Group in 2021 was 208.8 billion yuan, an increase of 1.519 billion yuan over the beginning of the year; The defect rate was 1.33%, down 0.13 percentage points. The provision coverage rate was 187.05%, an increase of 9.21 percentage points over the beginning of the year.
In terms of asset risk resolution, it is reported that last year, BOC continued to increase the risk investigation of customers, and resolved about 100 billion yuan of potential risks in advance in 2021; We strengthened the resolution of large non-performing loans, and handled nearly 150 billion yuan of non-performing loans throughout the year.
For the potential risk points affecting the quality of bank assets this year, Liu Jiandong, risk director of Bank of China, gave a prediction. He believes that at present, some phased and local risk pressures are relatively prominent. For example, some real estate enterprises are affected by market fluctuations and the capital chain is tightening; Local government debts in some regions are under the pressure of centralized repayment when due; Some weak enterprises in the middle and lower reaches of the industrial chain and traditional energy enterprises are facing difficulties in industrial upgrading and green transformation; Some import and export enterprises with high external dependence are facing external uncertainties such as epidemic situation and geopolitics.
At the same time, as a bank with a high proportion of overseas business, BOC is also highly concerned about the current fluctuations in the global financial market. Liu Jiandong said that since last year, commodity prices have risen rapidly and remain at a high level. Recently, multiple factors such as the conflict between Russia and Ukraine and the appreciation of the US dollar have been superimposed. Individual commodity prices have also broken through historical extremes, which has had an impact on the financial market. The Bank of China will pay close attention to the risks that may be caused by sharp price fluctuations in the financial market, strengthen risk control in key areas and concentration, and improve risk prevention, control and monitoring of large investors, Implement market risk management.
In addition, in view of the asset quality of Pratt & Whitney small and micro loans, Wang Wei, vice president of BOC, believes that in recent years, the non-performing balance and non-performing rate of BOC Pratt & Whitney loan business have continued to achieve “double reduction”. However, the current level does not truly reflect the current asset quality. On the one hand, these loans are newly issued in recent three years, and the time is still short; On the other hand, the extended principal and interest repayment policy of Pratt & Whitney small and micro loans is still being implemented, and the future non-performing risk exposure may lag behind.
However, Wang Wei also stressed that the overall quality of BOC Pratt & Whitney small and micro loans is controllable. Although the non-performing rate will be slightly higher than the average non-performing rate of all loans, it will still be within the scope allowed by regulatory assessment. In addition, BOC expects to add about 300 billion yuan of inclusive small and micro enterprise loans this year, up from 305.9 billion yuan last year, with a growth rate of 53.15%, ranking in the forefront of the four major banks.
Overseas interest rate hikes are good for overseas business performance and pay attention to the impact of geopolitics
As a Chinese bank with the highest degree of globalization, in the face of the increasingly complex and severe external international situation, whether the development of BOC’s overseas business will be affected has attracted much market attention.
Chen Huaiyu, vice president of BOC, said that looking forward to 2022, the global economic recovery will continue, providing a better external environment for the business development of our overseas institutions. At present, developed economies are promoting or brewing the shift of monetary policy, and the interest rate increase environment is beneficial to our overseas operation as a whole.
“However, the monetary policies of major developed countries have spillover risks, and the financial risks of emerging economies have increased, which requires our continuous attention. Generally speaking, BOC accounts for a small proportion of assets and income groups of institutions in emerging economies, and its impact is limited.” Chen Huaiyu said.
For the development strategy of BOC’s overseas business this year, Chen Huaiyu revealed that in terms of institutional layout, BOC’s overseas institutions have covered 62 countries and regions, and will steadily promote regional integration in the future. The Asia Pacific institutional coordination mechanism will cover all overseas member countries of RCEP, promote the regional management of institutions in Europe, Africa and the Middle East as planned, and initially build the regional headquarters of EU IPU.
In terms of risk prevention and control, BOC will continue to pay attention to the development and change of overseas epidemic, local economic development and geopolitics, adjust measures to local conditions, ensure the safety of personnel and institutions, and effectively respond to the changes of external environment and the requirements of stricter supervision. At the same time, we will further strengthen the quality control of overseas assets, actively control the proportion of industries greatly affected by the epidemic, optimize the rules for country risk rating and quota verification, and control the overall country risk at a reasonable level.
