Recently, Li Keqiang presided over the national regular meeting and the monetary policy committee of the central bank held the regular meeting in the first quarter of 2022. First of all, the national Standing Committee stressed that the economic growth target remains unchanged and the annual growth target of 5.5% must be guaranteed. Steady growth must be effective in the second quarter. Historically, infrastructure investment has achieved rapid results. We should pay attention to the development and effectiveness of infrastructure in the second quarter. Second, financial infrastructure should be raised again, and efforts should be strengthened to clarify the specific issuance rhythm, investment region and direction of special bonds. We can see that the monetary and credit data of the past three months reflect the lack of corresponding project demand for credit growth, which slows down the transmission effect of wide credit. It defines the source of project demand for steady growth, the coordination of financial force and wide credit, or improve the effectiveness of steady growth. Third, at the historical bottom of the bank’s net interest margin, easing credit and reducing costs are facing the pressure of commercial sustainability, and the availability and cost of liabilities, especially those of small and medium-sized banks, are facing great pressure, limiting the transmission of interest rate reduction and credit. This regular meeting of the monetary Policy Committee emphasized “efforts to stabilize the cost of bank liabilities” and “dredge the transmission mechanism of monetary policy”, which is conducive to improving policy transmission and alleviating the pressure of bank operation.
The growth target is clear, the policy strength is strengthened, the effectiveness transmission is dredged, which is good for banks. In the second quarter, we paid attention to the effectiveness of stable growth such as infrastructure, and reiterated our optimism about the bank market. Individual stocks recommend high-quality urban and rural commercial banks: Bank Of Chengdu Co.Ltd(601838) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Bank Of Jiangsu Co.Ltd(600919) etc. continuous recommendation of core targets: Bank Of Ningbo Co.Ltd(002142) , China Merchants Bank Co.Ltd(600036) , Postal Savings Bank Of China Co.Ltd(601658) , focusing on the value of undervalued targets.
Emphasize “dredge the transmission mechanism of monetary policy” and “control the cost of bank liabilities”
Compared with the fourth quarter of last year, the regular meeting of the monetary policy committee in the first quarter added “further dredge the transmission mechanism of monetary policy” before “maintaining reasonable and sufficient liquidity and enhancing the stability of total credit growth”. After the central bank “optimizes the interest rate system and strengthens the supervision of bank liabilities”, it will focus on “stabilizing the interest rate system”. While continuing to strengthen the control of deposit costs, it also emphasizes the control of liability costs, or also pays attention to the cost and availability of other liabilities such as inter-bank lending and inter-bank certificates of deposit, so as to promote the achievement of the policy objectives of broadening credit and reducing financing costs. The deposit and other active debt environment of small and medium-sized banks may be improved to alleviate the pressure of financial profit transfer on the industrial interest margin.
The annual growth target remains unchanged, and the policy strength may be significantly strengthened in the second quarter
On March 29, the meeting of the national standing committee pointed out that “maintaining the stable operation of the economy in the first quarter and the first half of the year is very important to achieve the goals of the whole year.” “Firm confidence, set goals and don’t relax”. The “policy of stabilizing the economy” specifies that the amount of special bonds was issued by the end of May last year and by the end of September this year. And make it clear that the remaining amount tends to have project areas, and expand the scope of use of special bonds. The statement of steady growth at the regular meeting of the monetary policy committee is also more firm, “strengthen cross cyclical and counter cyclical adjustment, strengthen the implementation of prudent monetary policy”, “boost confidence and provide stronger support for the real economy”. In the description of steady growth, “formulate plans to deal with greater uncertainty”. If the pressure exceeds expectations, policies of different magnitude may be launched. Historically, infrastructure has the fastest effect in steady growth, and to ensure the annual growth target of 5.5%, steady growth must be effective in the second quarter, so the force and effect of infrastructure in the second quarter deserve attention.
Boost confidence and stabilize expectations
In recent meetings, we have repeatedly mentioned “confidence” and “expectation”, “boosting confidence” and “strengthening confidence”, and the national Standing Committee has mentioned “no measures detrimental to stabilizing market expectations”. The situation outside China is complex, and the confidence and expectation of enterprises and residents have increased.
Risk warning: large-scale outbreak of real estate default risk; The economy fell sharply, exceeding expectations.
