\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 658 Postal Savings Bank Of China Co.Ltd(601658) )
Event: Postal Savings Bank Of China Co.Ltd(601658) released the annual report of 2021. In 2021, the growth rate of revenue was 11.38%, the growth rate of profit before provision was 8.06%, and the growth rate of net profit attributable to parent company was 18.65%. The performance was stable. Our comments are as follows:
The growth rate of Postal Savings Bank Of China Co.Ltd(601658) net profit in the fourth quarter of 2021 was 2.49%. The main driving factors of performance growth include scale expansion and growth of non interest income. However, the year-on-year narrowing of net interest margin and significant increase of cost expenditure are a drag on profit growth.
2021q4 net interest margin is expected to decline slightly month on month and narrow slightly compared with the same period. We estimate that the Postal Savings Bank Of China Co.Ltd(601658) net interest margin in the fourth quarter of last year was 2.35%, a decrease of 2bp compared with 2021q3 and 3bp year-on-year, which slightly dragged down the growth rate of net interest income. Specifically:
① on the asset side, Postal Savings Bank Of China Co.Ltd(601658) increased bond allocation in the fourth quarter of last year, and the proportion of financial asset investment in total assets increased by 0.7pc to 34.5% month on month, mainly due to the accelerated pace of special bond issuance in the second half of last year, combined with the reduction of reserve requirement by the central bank, resulting in relatively loose liquidity. In terms of loan structure, the paper assets that reduce the income are inclined to retail credit. Among them, the release of housing mortgage loans was significantly accelerated in the fourth quarter of last year. It is expected that it is mainly because the regulators guide financial institutions to reasonably meet the housing purchase demand of residents, and the backlog of mortgage credit in banks has entered the demand release stage.
At the yield level, although the interest bearing asset interest rate and loan interest rate decreased slightly, the overall downward range slowed down significantly. The corporate loan interest rate in the second half of last year was basically the same as that in the first half of last year, and the downward slope of retail credit interest rate tended to be flat.
② on the liability side, deposits are still the main source of Postal Savings Bank Of China Co.Ltd(601658) liabilities, accounting for about 96.3%. From the perspective of deposit structure, the proportion of retail deposits has further increased, and demand deposits have increased slightly. Benefiting from the repricing of a large number of medium and long-term limited deposits due in the second half of last year, Postal Savings Bank Of China Co.Ltd(601658) the cost of time deposits tended to be stable in the second half of last year, and the cost of all deposits decreased slightly.
③ with the change of comprehensive assets and liabilities, we expect the slight decline of asset side yield to drag down the net interest margin in the fourth quarter of last year. However, looking forward to 2022, Postal Savings Bank Of China Co.Ltd(601658) net interest margin is expected to maintain an excellent level in the industry. On the one hand, the reserves of Postal Savings Bank Of China Co.Ltd(601658) credit projects are relatively sufficient, and it is expected that the downward range of asset side yield will gradually slow down; On the other hand, benefiting from the repricing of medium and long-term limited deposits, the cost of deposits is expected to decline steadily.
Non interest income performed well. ① In the fourth quarter of last year, the growth rate of net income from handling fees and commissions was 36.1%, an increase of 13.4pc compared with the growth rate of 21q3, mainly due to accelerating the upgrading of wealth management system, realizing the transformation from single product sales to customer multi asset allocation, and the rapid growth of agent sales business income such as agent insurance, agent sales fund and agent sales collective asset management plan. In addition, the development momentum of financial management business and investment banking business is good, driving the growth rate of relevant income. ② In the fourth quarter of last year, the growth rate of other non interest net income reached 375%, mainly because Postal Savings Bank Of China Co.Ltd(601658) actively optimized the asset structure, increased investment in securities investment funds with light tax burden, and increased dividend income; And enrich trading strategies, expand trading scale and frequency, and increase bid ask spread income.
The increase of cost expenditure dragged down the growth of profit before provision. In the fourth quarter of last year, Postal Savings Bank Of China Co.Ltd(601658) single quarter cost income ratio reached 76.21%, up 6.76pc from the fourth quarter of 2020. This is mainly because Postal Savings Bank Of China Co.Ltd(601658) thoroughly implemented the talent strategy, accelerated the construction of professional talent team, steadily increased human resource investment, and was affected by the expiration of the social insurance premium reduction policy enjoyed during the epidemic in the same period in 2020. The cost income ratio increased significantly year-on-year, ultimately driving the year-on-year increase of 26.2% in business and management fee expenditure in the fourth quarter of last year, far exceeding the growth rate of revenue, and finally dragging down the growth rate of profit before provision.
The investment in human resources will provide better support for the medium and long-term operation of Postal Savings Bank Of China Co.Ltd(601658) and the expiration of social insurance premium reduction is a one-time influencing factor. Therefore, we expect that Postal Savings Bank Of China Co.Ltd(601658) cost income does not have a basis for continuous rise.
Asset quality remains excellent. At the end of the fourth quarter of last year, the indicators of Postal Savings Bank Of China Co.Ltd(601658) non-performing rate, concern rate and overdue rate were relatively stable, and were at a low level in the industry, with the provision coverage maintained at about 420%. Overall, the pressure of credit risk is small and the ability to resist risk is strong.
In the fourth quarter of last year, the Postal Savings Bank Of China Co.Ltd(601658) newly generated non-performing loans amounted to 10.062 billion yuan, and the net non-performing loan generation rate (annualized) in a single quarter was 0.63%, an increase of 11bp month on month, which may be affected by seasonal factors and is expected to decline steadily year-on-year. From the comparison between the net NPL generation rate in 2021 and 2020, the new NPL generation rate of various loans has slowed down significantly, especially the net NPL generation rate of corporate credit has decreased to 0.1%.
On the whole, the annual report performance of Postal Savings Bank Of China Co.Ltd(601658) in 2021 increased steadily. Looking forward to 2022, Postal Savings Bank Of China Co.Ltd(601658) credit reserves are sufficient, and the scale expansion is expected to accelerate; The pressure on its net interest margin has gradually eased and is expected to maintain an excellent level in the industry Postal Savings Bank Of China Co.Ltd(601658) business started late, there is no historical burden of asset quality, and there is little pressure on credit risk. It is expected that the annual performance will be good.
In the medium and long term, we believe that the advantages of Postal Savings Bank Of China Co.Ltd(601658) retail business have not been fully released, and there is still room for asset expansion and medium income growth. Under the condition of maintaining the advantages of low non-performing assets and low debt cost, we consider giving it a higher valuation level than other major banks based on growth.
Investment suggestion: we expect the company’s revenue growth rate to be 12.27% and net profit growth rate to be 18.6% in 2022; Given the investment rating of Buy-A, the six-month target price is 6.91 yuan, equivalent to 1.0x Pb in 2021.
Risk tip: the scale expansion is less than expected; The progress of retail transformation is less than expected; Emergencies disrupt the pace of economic recovery.
