\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 658 Postal Savings Bank Of China Co.Ltd(601658) )
Event:
On March 30, Postal Savings Bank Of China Co.Ltd(601658) released the annual report for 2021. In 2021, the operating revenue was 318762 billion, yoy + 11.4%, and the net profit attributable to the parent company was 76.170 billion, yoy + 18.6%. The weighted average return on net assets is 11.86% (YoY + 0.02pct).
Comments:
Revenue growth has increased quarter by quarter since the end of 2020, and profit growth has remained relatively high. The year-on-year growth rates of Postal Savings Bank Of China Co.Ltd(601658) revenue, profit before provision and net profit attributable to parent company in 2021 were 11.4%, 8.1% and 18.6% respectively, and the growth rates changed by 1.2, – 3.9 and – 3.4pct quarter on quarter respectively; When the asset quality remained stable, the provision for credit and other losses was 46.638 billion yuan in the whole year (a year-on-year decrease of 3.76 billion yuan, yoy-7.5%). Among them, the year-on-year growth rates of 4q single quarter revenue and net profit attributable to the parent were 15.0% and 2.7% respectively. In terms of year-on-year growth of split performance, the positive contribution of scale expansion is further enhanced, the negative drag of interest margin is slightly expanded, and the positive contribution of non interest income is strengthened; The negative drag of operating expenses increased, and the impact of provision was roughly the same.
Net interest income increased by 6.3% year-on-year to 269382 billion yuan: the asset side maintained strong expansion momentum, and the net interest margin was quite resilient (only narrowed by 1bp quarter on quarter), forming a strong support for net interest income.
1) the asset expansion rate increased quarter on quarter, and the credit structure was further optimized. At the end of 2021, Postal Savings Bank Of China Co.Ltd(601658) total assets / interest bearing assets / loans increased by 10.9%, 10.8% and 12.9% year-on-year respectively, and the growth rate increased by 1.11pct, 0.86pct and 0.18pct quarter on quarter respectively; The proportion of loans in interest bearing assets decreased by 0.78pct to 51.3% quarter on quarter. Since 2q20, the proportion of loans has remained stable above 50%. At the end of 2021, the total amount of loans increased by 737841 billion yuan compared with the beginning of the year, including 276151 billion yuan for public and 502260 billion yuan for retail respectively. The newly added public and retail loans were about 3:5, and the balance of personal loans such as consumption and small loans increased rapidly; Meanwhile, the bill decreased by 40.57 billion yuan compared with the end of the previous year. At the end of 2021, the deposit loan ratio, the proportion of credit assets and the proportion of personal loans increased by 1.65 PCT, 0.92 PCT and 1.28 PCT respectively compared with the beginning of the year, and the asset structure was further optimized.
2) core liabilities maintained steady growth, and the proportion of personal deposits rose to 88.5%. At the end of 2021, Postal Savings Bank Of China Co.Ltd(601658) total liabilities / interest bearing liabilities / deposits increased by 10.4%, 10.4% and 9.6% year-on-year respectively, and the growth rate changed by 1.18pct, 1.11pct and -0.51pct quarter on quarter respectively. The growth rate of deposits slowed down slightly, but still maintained a high growth rate close to 10%; The proportion of deposits in interest bearing liabilities was roughly flat quarter on quarter, stable at around 97%. In terms of deposit structure, the proportion of demand deposits decreased by 2.0pct to 34.4% compared with the beginning of the year, and the proportion of personal deposits increased by 0.5pct to 88.5% quarter on quarter Postal Savings Bank Of China Co.Ltd(601658) attaches great importance to deposit cost control. The proportion of one-year and below deposits has increased, the long-term high-cost deposits have dropped significantly, and the deposit structure has been continuously optimized.
3) the net interest margin in 2021 is 2.36%, which continues to be the industry leader. The net interest margin in 2021 was 2.36%, which narrowed 1bp quarter on quarter, 6BP lower than that in 2020. The narrowing of interest margin is an industry trend, Postal Savings Bank Of China Co.Ltd(601658) narrowing range is relatively small, and the absolute interest margin is still at the leading level in the industry. Specifically, the rate of return on interest bearing assets was 3.95%, only a slight decrease of 2bp compared with 2020; Among them, the loan yield was 4.68%, a decrease of 7bp compared with 2020. The beneficial asset side structure is optimized. Compared with the peers, the asset side yield has a smaller downward range. The cost ratio of interest bearing liabilities was 1.65%, a slight increase of 4bp compared with 2020; Among them, the deposit cost rate was 1.63%, an increase of 4bp compared with 2020, and the debt end cost rate increased slightly, but the overall debt cost is still at a low level in the industry.
The year-on-year growth rate of net income from handling fees and commissions was as high as 33.4%. In 2021, Postal Savings Bank Of China Co.Ltd(601658) non interest income increased by 50.4% year-on-year to 49.380 billion yuan, of which the net income from handling fees and commissions increased by 33.4% year-on-year to 22.007 billion yuan. The main increases were as follows: 1) the agency business increased by 5.772 billion yuan year-on-year, an increase of 88.67% Postal Savings Bank Of China Co.Ltd(601658) accelerate the upgrading of wealth management system, promote the transformation from single product sales to multi asset allocation of customers, and achieve rapid growth in business income from selling insurance, funds and collective asset management plans on a commission basis; 2) Settlement and clearing business increased by 1.345 billion yuan or 16.24% year-on-year, mainly due to the steady growth of electronic payment transaction scale and income; 3) Financial services increased by 972 million yuan year-on-year, an increase of 23.15%. In addition, bank card business, investment banking business, custody business and other subjects also achieved good growth as a whole.
Other non interest net income increased significantly by 67.6% year-on-year to 27.373 billion yuan, with a relatively low growth rate. Among them, 1) the investment income increased by 5.393 billion yuan year-on-year, with an increase of 50.03%, mainly benefiting from factors such as the investment dividend income of securities investment funds, the improvement of trading strategies and the income of bid ask spread; 2) The profit and loss from changes in fair value increased by 2.399 billion yuan year-on-year, an increase of 28.56%, mainly from changes in bond valuation; 3) Exchange gains and losses were affected by the fluctuation of RMB against the US dollar, with a year-on-year increase of 3.070 billion yuan.
The construction of wealth management system has achieved initial results, and the retail business has great growth potential Postal Savings Bank Of China Co.Ltd(601658) has nearly 40000 business outlets and serves more than 600 million individual customers. It is positioned to serve “agriculture, rural areas and farmers”, urban and rural residents and small and medium-sized enterprises. Relying on the unique business model of “self support + agency”, it has a natural retail gene and resource endowment. Since 2019, Postal Savings Bank Of China Co.Ltd(601658) intensify efforts to promote the construction of wealth management system, strengthen the hierarchical operation of customers, jointly obtain customers from multiple lines, and promote the hierarchical migration of customers. By the end of 2021, the number of wealth customers had increased by 24.12% to 3.5621 million compared with the end of the previous year, and the number of VIP customers had increased by 17.07% to 426298 million compared with the end of the previous year; Retail AUM increased by 11.4% year-on-year to 12.53 trillion yuan, personal banking revenue increased by 12.0% year-on-year, and its proportion in operating revenue increased by 0.38pct to 69.6% year-on-year. By the end of 2021, personal deposits had increased by 10.4% year-on-year to 10.05 trillion yuan, and personal loans had increased by 15.4% year-on-year to 3.76 trillion yuan. In 2021, postal Huiwanjia bank was approved to open, and Postal Savings Bank Of China Co.Ltd(601658) became the first large state-owned bank to participate in the pilot of direct selling bank. The strategic layout of direct selling banks is expected to further enable the development of the group’s retail banking business in the future.
The non-performing rate was stable at a low level of 0.82%, and the asset quality remained excellent. At the end of 2021, Postal Savings Bank Of China Co.Ltd(601658) NPL ratio was 0.82%, unchanged quarter on quarter. The proportion of non-performing loans and loans overdue for more than 90 days was 1.35. All loans overdue for more than 60 days were included in non-performing loans, and the proportion of loans overdue for more than 30 days was 93.03%. The recognition of non-performing loans was prudent.
When the asset quality remained stable, the credit impairment loss accrued in the whole year was 46.638 billion yuan, a year-on-year decrease of 3.76 billion yuan; Among them, the loan impairment loss was 28.728 billion yuan (a year-on-year decrease of 23.649 billion yuan), and the financial investment impairment loss was 12.2 billion yuan, which was mainly used for the return of financial risk assets. At the end of 2021, Postal Savings Bank Of China Co.Ltd(601658) provision coverage rate was 418.61%, with a quarter on quarter decrease of 4.09pct. Since 2021, the provision coverage rate has been 420%, with strong risk offsetting ability.
The capital adequacy ratio decreased slightly Postal Savings Bank Of China Co.Ltd(601658) while enhancing the ability to supplement internal capital, we should comprehensively use external financing tools to supplement capital. Due to the rapid expansion of the asset side, the capital adequacy ratio decreased slightly. At the end of 2021, the core Tier-1 capital adequacy ratio / Tier-1 capital adequacy ratio / capital adequacy ratio were 9.92% / 12.39% / 14.78% respectively, and the quarter on quarter ratio decreased by 0.08pct/0.16pct/0.70pct respectively.
Earnings forecast, valuation and rating Postal Savings Bank Of China Co.Ltd(601658) asset quality is high, deposit source is stable, asset side optimization space is large, and it has unique advantages in the field of county finance. It is a leading large retail bank in China, with significant growth potential; At the same time, efforts to promote the construction of wealth management system have achieved initial results since 2019. With the implementation of national strategies such as “Rural Revitalization” and “common prosperity”, more Postal Savings Bank Of China Co.Ltd(601658) customers are expected to gradually enter the rich group, give birth to huge demand for wealth management, and promote the continuous deepening of Postal Savings Bank Of China Co.Ltd(601658) wealth business and retail transformation. Combined with the company’s operating performance and future potential space in 2021, the company’s EPS forecast for 20222023 is raised to 0.96 yuan (+ 1.1%) / 1.11 yuan (+ 5.7%), and the EPS forecast for 2024 is increased to 1.28 yuan, corresponding to 0.71/0.64/0.58 times of A-share Pb and 0.67/0.60/0.54 times of H-share Pb in 202224. Maintain the “buy” rating of a H shares.
Risk tip: if China’s economic growth is lower than expected, it may affect the strength and quality of corporate credit and the progress of retail transformation.
