Key investment points:
The industry index outperformed the market, and individual stocks rose and fell. From March 1 to March 31, the CSI 300 index fell 7.84% and the bank index fell 1.53%. Among the 30 primary industry indexes (CITIC), the performance of the bank index ranked seventh in the range. Among the sectors, the index of large state-owned banks rose 3.49%, the index of national joint-stock banks fell 4.68%, and the index of regional banks rose 0.58%. The top five banks that perform on stocks are: Bank of Lanzhou, the Bank of Lanzhou, the Bank of Maryland, the China Citic Bank Corporation Limited(601998) \ .
The social finance in February was lower than expected, and the economic data was better than expected. In February, the increment of social financing scale was significantly lower than expected, mainly because the increment of loans was lower than expected. Among them, residential loans showed negative growth for the first time. Both off balance sheet and direct financing performed well. The economic data from January to February were better than expected, and the growth rate of fixed asset investment, retail scale of social consumer goods and industrial added value improved. In March, the policy interest rate remained unchanged, with a one-year LPR of 3.70% and a five-year LPR of 4.60%, both unchanged from the previous month. In March, the manufacturing PMI fell back to the contraction range.
The people’s Bank of China held a regular monetary policy meeting in the first quarter, and the people’s Bank of China released the risk rating results of financial institutions. The regular monetary policy meeting pointed out that it is necessary to further dredge the transmission mechanism of monetary policy, maintain reasonable and sufficient liquidity, enhance the stability of the growth of total credit, keep the growth rate of money supply and social financing basically match the economic growth, and maintain the basic stability of macro leverage ratio. The risk rating results of financial institutions show that most institutions are within the safety boundary (level 1-7), and high-risk institutions (level 8-D) have decreased for six consecutive quarters, more than half of the peak pressure drop. Among the 4398 participating institutions, there are 24 large banks, 3997 small and medium-sized banks and 377 non banking institutions.
Investment advice. In 2021, the performance growth and asset quality of the banking industry will be stable and good, and the impact of real estate risks on asset quality will be controllable. Compared with the macro disturbance, we pay more attention to the improvement of the “internal strength” of the industry. It is expected that in 2022, the net interest margin of the banking sector will be low before and high after, the growth rate of total assets of the banking industry will be improved, the asset quality and provision coverage will continue to improve, and the performance growth will drop slightly, but still remain at a high level in recent years. It is considered that the extremely low valuation level of the current banking sector fully reflects the pessimistic expectation of the market on the credit risk exposure and macroeconomic downturn of the real estate industry. Considering the good performance growth of banks, the continuously improved asset quality and the warming of real estate policies, it is considered that the current sector has high allocation value and maintains the investment rating of “stronger than the big market” of the industry. It is suggested to focus on the head state-owned banks and joint-stock banks with solid asset quality, as well as the head urban commercial banks and rural commercial banks in regional economically developed areas.
Risk tip: the asset quality has deteriorated significantly, resulting in systemic risk
