\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Event: Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released the annual report of 2021. In 2021, the growth rate of revenue was 16.31%, the growth rate of profit before provision was 19.07%, and the growth rate of net profit attributable to parent company was 21.34%. The performance was excellent. Our comments are as follows:
\u3000\u30001. In the fourth quarter of 2021, the growth rate of net profit reached 27.78%. The main driving factors of performance growth came from the expansion of scale, the widening of net interest margin and the reduction of expenses.
\u3000\u30002. 21q4 net interest margin was better than expected. In the fourth quarter of last year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) single quarter net interest margin was 3.13%, up 5bp month on month. The net interest margin showed an upward trend for three consecutive quarters after reaching the bottom in the first quarter of last year.
① the asset side continues to tilt towards high-yield assets. In the fourth quarter of last year, the new credit of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) single quarter was only 485 million yuan, which was mainly due to the four movements of credit asset circulation, which transferred out the loan of 5.2 billion yuan in total. The purpose was to appropriately reduce the credit growth rate of that year. If this factor was restored, the credit growth rate of the whole year would increase by 4 percentage points.
From the perspective of the internal structure of new credit, there are two characteristics: one is to significantly reduce corporate credit by 3.6 billion yuan and increase the investment of retail credit, which is consistent with the rhythm of asset allocation in the fourth quarter of previous years; Second, the parent bank’s retail credit supply is better than that in the same period of previous years, and it is expected to benefit from the drive of the inclusive financial pilot zone around Changshu; The credit supply of rural banks also showed a good trend.
Under the background of the end of last year, the proportion of retail business \U00056eb1.
From the perspective of the investment direction of personal business loans, there are two major trends: first, adhere to small and decentralized loans. At the end of the fourth quarter of last year, the proportion of loans with an amount of less than 1 million and 1-10 million accounted for 41.87% and 34.8% of the total loans respectively, continuing the upward trend; Second, insist on increasing the proportion of credit insurance loans. At the end of last year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) credit + guarantee loans accounted for 44.25% of the total loans, up 1.15pc month on month. Through the optimization of asset structure and credit structure, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) the loan interest rate showed a rising trend in the second half of last year.
② the liability side focuses on reducing high-cost deposits Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) deposits are mainly retail. As a rural commercial bank, its retail customers are mostly small town residents and farmers, and the customers are older. Therefore, its deposit customers are more sensitive to the interest rate of deposits, mainly medium and long-term fixed-term deposits. At the beginning of last year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) by guiding depositors to split long-term deposits into short-term deposits, the proportion of medium and long-term deposits decreased, and the optimization of deposit structure drove its deposit cost to decline last year.
③ looking forward to 2022, the government work report will weaken the requirements for the growth rate of inclusive small and micro loans for large banks, and the direct competitive pressure faced by small and medium-sized banks may also be reduced, and the Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) asset side yield is expected to remain stable; The central bank’s reform of deposit pricing method is relatively beneficial to banks with high medium and long-term limited deposits such as Changshu. It is expected that the annual debt cost will decrease steadily. Based on the changes of comprehensive assets and liabilities, the Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) net interest margin this year is expected to be better than the market expectation.
\u3000\u30002. In the fourth quarter of last year, there was less cost expenditure, which supported the profit before provision. In the fourth quarter of last year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) cost income ratio was 43.87%, down 7.06pc year-on-year. On the one hand, it was due to the preparation of the inclusive financial pilot zone and the off-line marketing reserve activities in the fourth quarter of 2020, with a high base of expenses; On the other hand, in 2021, the company implemented strict savings in office expenses, and the related expenses decreased significantly. Driven by the year-on-year decline of cost income ratio, the growth rate of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) expense expenditure in the fourth quarter of last year was only 9.2%, which was far lower than the growth rate of revenue, thus supporting the growth rate of profit before provision.
\u3000\u30003. Asset quality remains excellent. At the end of the fourth quarter of last year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) NPL rate and concern rate remained stable, and continued to be at the leading level in the industry. The annual NPL net generation rate was 0.32%, the lowest since 2014. The overdue rate decreased by 7bp compared with the end of June last year, and the provision coverage increased by 10pc month on month. Although the epidemic in 2020 led to a slight fluctuation in its asset quality, the impact of the epidemic has been significantly weakened, and its asset quality is much better than that before the epidemic. On the whole, its credit risk pressure is small and its ability to resist risks is strong.
\u3000\u30004. Core profitability rebounded. Based on the release of profits and the obvious recovery of growth rate, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) ROA and roe reached 1.03% and 11.62% respectively in 2021, an increase of 5bp and 1.28pc compared with 2020. Considering that the company has a convertible bond issuance plan this year, which may dilute the roe in 2022 and next year, in the medium and long term, how to improve the roe may be the key problem that the company needs to solve.
\u3000\u30005. Looking forward to the whole year of 2022, we expect that the rapid asset launch speed and the year-on-year widening of the superimposed net interest margin will jointly support the rapid growth of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) revenue, and the excellent asset quality will drive the annual profit growth and maintain the excellent level of the industry.
Investment suggestion: we expect the company’s revenue growth rate to be 17.51% and net profit growth rate to be 25.78% in 2022. We give the investment rating of Buy-A, and the six-month target price is 8.99 yuan, equivalent to 1.25x Pb in 2021.
Risk tip: the intensified competition of small and micro businesses leads to the narrowing of interest margin; Significant deterioration of asset quality;
