\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 398 Industrial And Commercial Bank Of China Limited(601398) )
Key points
Event:
On March 30, Industrial And Commercial Bank Of China Limited(601398) released the annual report of 2021. The annual operating revenue was 942762 billion yuan, yoy + 6.8%, and the net profit attributable to the parent company was 348338 billion yuan, yoy + 10.3%. The weighted average return on net assets is 12.15%, yoy + 0.20pct.
Comments:
The profit growth rate increased quarter by quarter, and the strategic layout was steadily promoted. In 2021, Industrial And Commercial Bank Of China Limited(601398) revenue increased by 6.8% year-on-year to RMB 942762 billion, and net profit attributable to parent increased by 10.3% year-on-year to RMB 348338 billion, with year-on-year growth rates of – 0.2 and 0.1pct respectively compared with 1-3q21. The profit growth rate has increased quarter by quarter since 3q21, and the total profit remains the first in the global banking industry. In terms of the year-on-year growth of 2021 performance, scale expansion and non interest income are the main contribution sub items, driving the performance growth of 15.9 and 5.3pct respectively, and the drag of operating expenses is slightly higher than that of 1-3q21.
In 2021, Industrial And Commercial Bank Of China Limited(601398) steadily promoted the four major layout of “developing strengths, making up weaknesses, consolidating the foundation and strengthening the foundation”. Specifically: 1) in terms of developing strengths, focus on consolidating business advantages such as institutions, companies, settlement and transactions; 2) In terms of complementarity and coordination, we will focus on promoting four strategic priorities: personal finance, foreign exchange business, key regions and urban-rural linkage. In terms of personal financial business, at the end of 2021, the total number of individual customers exceeded 700 million, the total amount of personal financial assets (AUM) was nearly 17 trillion yuan, personal loans increased by 11.7% to nearly 8 trillion yuan, personal deposits increased by 7.2% to 12.5 trillion yuan, and the balance of financial products was nearly 260 billion yuan; 3) In terms of consolidating the foundation, we will focus on strengthening financial science and technology and financial innovation. In 2021, we will invest 25.987 billion yuan in financial science and technology to forcibly enable the construction of “digital industrial and Commercial Bank (d-icbc)” with science and technology; 4) Based on the strong foundation, focus on improving the comprehensive risk management ability, GBC linkage efficiency, and the competitiveness of outlets and talent teams.
The asset structure was further optimized, and the proportion of credit rose to 60%. At the end of 2021, the total assets of the company increased by 5.5% to 35.17 trillion compared with the end of the previous year, and the growth rate decreased by 0.3pct compared with the end of 21q3. In terms of asset changes in a single quarter, the total asset scale of 4q decreased by 226683 billion yuan, a year-on-year decrease of 99.890 billion yuan, which was mainly dragged down by deposits with the central bank and interbank assets (a total decrease of 793015 billion yuan); However, 4q’s new loans increased by 241766 billion, an increase of 60.765 billion year-on-year, and the loan growth rate increased by 0.2pct to 11.0% quarter on quarter, reflecting its strong credit lending ability. The proportion of loans in interest bearing assets increased by 1.2pct to 60.0% compared with the end of the previous quarter, and the overall asset structure was further optimized.
Corporate credit resources were inclined to low-risk assets, and the proportion of retail credit increased to 38.4%. In terms of credit structure, 1) corporate loans increased by 1.09 trillion yuan in the whole year, with a year-on-year decrease of 54.939 billion yuan. Credit resources focused on credit fields with excellent asset quality and strong countercyclical attributes. New loans for transportation, warehousing and postal industry, leasing and business services industry and Water Conservancy Environment accounted for the top, accounting for 32.7%, 20.3% and 19.4% respectively. Asset security was further improved; 2) Retail credit increased by 829502 billion in the whole year, an increase of 97.847 billion year-on-year. The proportion of retail credit increased by 0.4pct to 38.4% quarter on quarter. New personal loans were mainly concentrated in personal housing loans and personal operating loans, accounting for 76.5% and 21.8% respectively.
The debt structure was generally stable, and the proportion of retail deposits rose to 47.9%. At the end of 2021, Industrial And Commercial Bank Of China Limited(601398) total liabilities and deposits increased by 4.8% and 4.9% respectively compared with the end of the previous year, and the growth rate changed by – 0.4% and 0.2pct respectively compared with the end of 21q3. The debt structure is generally stable, with deposits, bonds payable and interbank liabilities accounting for 86.4%, 2.6% and 11.0% respectively. In terms of deposit structure, retail deposits and corporate deposits accounted for 47.9% and 51.1% respectively, and the proportion of retail deposits increased by 0.4pct compared with 1h21. At the end of 2021, demand deposits accounted for 49.6%, which has been roughly stable at about 50% in recent years.
The narrowing range of NIM is at the better level of comparable peers. In 2021, the asset side pricing of the company was under pressure, but the downward range was gradually narrowed quarter on quarter. The yield of interest bearing assets in 2021 was 3.56%, a decrease of 8bp compared with 2020, but basically flat compared with 1h21. On the liability side, the company hedged the downward pressure of interest margin by reducing high-cost deposits. The cost ratio of interest paying liabilities in 2021 was 1.64%, a decrease of 3bp compared with the beginning of the year. As the downward slope of asset side pricing slows down and the superimposed company continues to optimize the debt structure, the interest rate spread has maintained strong toughness since the second half of 2021. The interest rate spread in 2021 is 2.11%, which is flat on a quarter on quarter basis. Under the general trend of narrowing the interest rate spread in the banking industry, the narrowing range of NIM is at a better level than that of comparable peers.
Non interest income performed well. In 2021, the company’s non interest income increased by 6.9% year-on-year to 252082 billion yuan. Among them, the net fee and commission income increased by 1.4% year-on-year to 133024 billion yuan, mainly due to the increase in third-party payment business income and public fund custody business income; Net other non interest income increased by 13.7% year-on-year to RMB 119058 billion, mainly due to the increase in the investment income of equity instruments and bonds. The company achieved better capital gains thanks to the revaluation of the value of bond assets brought about by the downward yield of the bond market.
The “double drop” of non-performing indicators was achieved, and the provision coverage exceeded 200%. By the end of 2021, the balance of Industrial And Commercial Bank Of China Limited(601398) non-performing loans was 293429 billion, a quarter on quarter decrease of 17.887 billion, the non-performing loan ratio decreased by 10bp to 1.42%, and the non-performing index achieved “double decline”; Overdue loans accounted for 86.9% of non-performing loans, and overdue loans were basically included in non-performing loans. The overdue bad scissors difference was – 38.5 billion yuan, negative for seven consecutive quarters, a record low. Under the condition of continuous improvement of asset quality, the company’s provision policy remained prudent and steady, the provision coverage increased by 9.0pct to 205.8% compared with the end of the previous quarter, exceeded 200% for the first time in nearly seven years, and the risk offset ability was further enhanced.
The capital adequacy ratio rose steadily quarter on quarter, ranking in the forefront of major banks in the world Industrial And Commercial Bank Of China Limited(601398) on the basis of retained profits and replenishment of capital, we actively expanded the channels of replenishment of external capital. 4q21 successfully issued 30 billion yuan of perpetual bonds and 60 billion yuan of secondary capital bonds, further enhanced its capital strength, and its capital adequacy ratio exceeded 18%, ranking among the top large banks in the world. By the end of 2021, the core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio were 13.31%, 14.94% and 18.02% respectively, and the quarter on quarter ratio increased by 0.17, 0.26 and 0.57pct respectively.
Earnings forecast, valuation and rating Industrial And Commercial Bank Of China Limited(601398) has the advantages of scale, license, resource reserve and other endowments. The financial technology development plan for the new three years has set sail smoothly, with the in-depth implementation of the “first personal financial bank” strategy, which is expected to drive the improvement of the company’s operating performance. Under the background of strong expectations of “broad credit” and “stable growth” and the need to boost effective credit demand, as a large state-owned bank, ICBC is expected to play a “leading role” in credit supply, and the loan scale is expected to be further improved. Combined with the annual report of 2021, the EPS forecast of the company from 2022 to 2023 is increased to 1.05 yuan (up 4.0%), 1.12 yuan (up 5.7%), and the EPS forecast of 2024 is increased to 1.17 yuan, The corresponding Pb valuation of the current stock price is 0.52/0.48/0.44 times respectively, maintaining the “buy” rating.
Risk tip: if the macro economy goes down more than expected, it may increase the potential risk of large risk exposure.
