\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 658 Postal Savings Bank Of China Co.Ltd(601658) )
Core view
The growth rate of revenue and net profit attributable to parent companies ranks first among state-owned enterprises, with strong growth Postal Savings Bank Of China Co.Ltd(601658) 2021 annual revenue was 318762 billion yuan, with a year-on-year increase of 11.38%, ranking first among state-owned banks; The net profit attributable to the parent company was 76.170 billion yuan, a year-on-year increase of 18.65%, much higher than the other five listed state-owned banks, with strong profit growth. In 2021, roaa and roae were 0.64% and 11.86% respectively, up 4bp and 2bp respectively year-on-year.
The growth rate of net interest income in a single quarter was stable, and the growth rate of non interest income widened quarter by quarter. Q4’s single quarter revenue was 80.404 billion yuan, a year-on-year increase of 14.96%, slightly lower than Q3. In 2021, the net interest income in the whole year and Q4 single quarter was 269382 billion yuan and 68.492 billion yuan respectively, with a year-on-year increase of 6.32% and 5.81% respectively. The growth rate of net interest income in Q1-Q4 single quarter was stable; In 2021, the non interest income in the whole year and Q4 single quarter was 49.380 billion yuan and 11.912 billion yuan respectively, with a year-on-year increase of 50.44% and 128.64% respectively. The growth rate of non interest in the single quarter jumped, becoming a highlight of the revenue structure. The annual non interest income accounted for 15.49%, with a year-on-year increase of 4.02pct, and the revenue structure was continuously optimized.
The interest rates at both ends of the deposit and loan are under marginal pressure, which is a drag on the annual net interest margin. Q4 single quarter net interest margin was 2.25%, 4bp lower than Q3. The annual net interest margin in 2021 was 2.36%, down 6BP year-on-year. The average yield of loans at both ends of the year decreased by 68.4% year-on-year; The average cost rate of deposits was 1.63%, up 4bp year-on-year. The net interest margin of the six state-owned banks decreased to varying degrees year-on-year, but Postal Savings Bank Of China Co.Ltd(601658) net interest margin still ranked first. The ability to acquire assets is strong. By the end of 2021, the average balance of interest bearing assets had increased by 9.18% year-on-year, with a growth rate higher than that of the previous year, realizing the goal of “compensating price by volume”.
The proportion of medium income increased to a higher level. In 2021, the non interest income was 49.380 billion yuan, with a year-on-year increase of 50.44%, accounting for 15.49% of the revenue, and the proportion of the medium revenue in the revenue rose to 6.90%, including 12.239 billion yuan of the handling fee income of the agency business, with a year-on-year increase of 88.67%, mainly due to the rapid growth of the consignment business income of insurance, fund and collective asset management plan by accelerating the upgrading of the wealth management system. The middle income of Q1-Q4 single quarter increased by more than 20%, and the other non interest income of Q3 and Q4 single quarter increased by 4.22 times and 3.75 times respectively year-on-year, mainly due to the increase of fund allocation and flexible trading with light tax burden, and the contribution of dividend income and bid ask spread.
More than 600 million retail customers contribute about 70% of revenue, and retail AUM is comparable to on balance sheet assets. By the end of 2021, 637 million individual customers had been served, including 426298 million VIP customers, a year-on-year increase of 17.07%; There were 3.5621 million wealth customers, with a year-on-year increase of 24.12%. Retail AUM was 12.53 trillion yuan, which has risen to 99.54% of the assets on the balance sheet. The retail customer base is deep, driving the contribution of personal banking revenue to 69.60%. The scale of the bank’s financial products was 915255 billion yuan, a year-on-year increase of 5.77%, of which net worth products accounted for 83.87%. The annual net profit of China post financial management was 3.202 billion yuan, with a year-on-year increase of 3.20%. As an important starting point of Postal Savings Bank Of China Co.Ltd(601658) retail transformation, China post financial management strengthened coordination with the parent bank in benefiting farmers and green finance to form a differentiated product line.
The demand for credit is strong, and the growth rate of agriculture related, inclusive and green loans is higher than the overall growth rate of loans. By the end of 2021, Postal Savings Bank Of China Co.Ltd(601658) total assets were 12.59 trillion yuan, with a year-on-year increase of 10.87%; The loan balance was 6.45 trillion yuan, a year-on-year increase of 12.91%. Among them, the year-on-year growth rates of corporate loans, bill discounting and retail loans were 13.96%, – 8.37% and 15.44% respectively. The demand for corporate and retail loans was strong, and the low-yield bill assets decreased. Public real estate accounts for 2.15% of the total loans, which is still at a very low level. The balances of agriculture related loans, Pratt Whitney small and micro enterprise loans and green loans were 1.61 trillion yuan, 960602 billion yuan and 372294 billion yuan respectively, with year-on-year growth rates of 13.90%, 19.89% and 32.52% respectively, which were higher than the overall growth rate of bank wide loans.
The amount of non-performing loans increased and the rate of interest and non-performing loans decreased. By the end of 2021, the balance of non-performing loans was 52.685 billion yuan, an increase of 4.60% year-on-year; The non-performing loan ratio was 0.82%, down 6BP year-on-year, unchanged from the end of the third quarter. The generation rate of non-performing assets was 0.60%, down 19bp year-on-year, and the risk of incremental assets was well controlled. The attention rate is 0.47%, down 7bp year-on-year, and the generalized non-performing rate (non-performing rate + attention rate) is 1.29%, down 13bp year-on-year. The asset quality is stable and better, which can be called a benchmark for listed banks. It is expected that the non-performing rate will have further exploration space in the future. High staff costs and increased investment in technology and marketing have dragged down the cost income ratio. In 2021, the business and management fee was 188102 billion yuan, with a year-on-year increase of 13.55%, including savings agency fee and others
Employee expenses increased by 8.34% and 15.33% respectively year-on-year. Q4 single quarter business and management fees increased by 26.16%, and the high increase of expenses was mainly reflected in the fourth quarter. Employee expenses and other expenses were the main drag, which was mainly affected by the increase of human resources investment, the expiration of the social security fee reduction policy enjoyed in the same period of last year, and the increase of information technology and marketing investment, so that the cost income ratio increased by 1.13pct to 59.01% year-on-year.
The safety margin of capital is large, and the main construction of advanced law has been successfully completed. Under the weight method, the core Tier-1 capital adequacy ratio is 9.92%, 12.39% and 14.78%, which is higher than that at the end of 2020, and the capital safety cushion is further enriched. In October 2021, Postal Savings Bank Of China Co.Ltd(601658) was selected into the second group of China’s systemically important banks, and the regulatory lower limit of core tier 1 capital adequacy ratio increased by 50bp. At present, the margin of capital safety is sufficient. Except for Postal Savings Bank Of China Co.Ltd(601658) , the other five state-owned banks and China Merchants Bank Co.Ltd(600036) have implemented the advanced law for capital management, and Postal Savings Bank Of China Co.Ltd(601658) is making every effort to promote it. By the end of 2020, the construction of 109 subjects of advanced methods has been successfully completed. With the implementation of the advanced law in the future, the capital safety margin of Postal Savings Bank Of China Co.Ltd(601658) will be significantly expanded.
Investment advice
Postal Savings Bank Of China Co.Ltd(601658) is a large state-owned bank with distinctive retail characteristics. The self operated + agency model goes deep into the county and countryside. Although the margin of net interest margin is under pressure, it still ranks first among state-owned banks; Superimposed on the comparative advantages of agriculture related loans, inclusive small and micro enterprises and green loans, it has strong asset acquisition ability, and the effect of “compensating price by quantity” is prominent. More than 600 million retail customers contribute nearly 70% of revenue, and the growth rate of medium revenue is very remarkable. Retail AUM is comparable to on balance sheet assets, just like a rising star in the field of wealth management. Under the background of continuous excellent asset quality, comprehensive decline of non-performing rate, non-performing generation rate and concern rate, and continuous rise of provision coverage, the provision has realized the back feeding of profits. We use the three-stage DDM model for Valuation: under the absolute valuation method, it is predicted that the fair value per share in 2022 will be 6.96 yuan, corresponding to 0.93xpb; Under the relative valuation method, 0.92-0.95xpb is given, and the corresponding stock price range is 6.86-7.08 yuan. Maintain Postal Savings Bank Of China Co.Ltd(601658) “recommended” rating.
Risk tips
The risks brought by business transformation and the abnormal increase of non-performing loan ratio; The implementation of the policy is less than expected.
