Key investment points:
The index fluctuation of the banking sector increased this week (3.28-4.1), and the overall rebound was large. As of the last trading day of this week, the price book value ratio exceeded lf0.5% 64pb, the valuation level increased on a weekly basis, and the market heat decreased. The average daily trading volume was 928 billion yuan (on a weekly basis – 2.4%). This week, the central bank invested 420 billion yuan in a wide range (including 7-day reverse repo), and the 7-day reverse repo interest rate remained at 2.10%. The overall liquidity was at a good level; On Friday (April 1), it was announced that the weighted value of dr007 was 1.81%, which was lower than the reverse repo rate, the liquidity was loose, and the guidance level of interest rate was well conducted.
Steady growth, steady economy, and gradually release policy tools. This week, the valuation level of China Citic Bank Corporation Limited(601998) sector continued to maintain an independent market, and the overall trend was relatively strong. Some banks increased by more than 20% this week, and the valuation elasticity was enhanced. At present, the foreign political and economic environment is still highly uncertain, and the imported inflation pressure still exists; China faces three major pressures: supply constraints, insufficient demand and weakening expectations, and the repair of bank valuation faces certain constraints. However, we can also see that the policy level has successively introduced policies to benefit the people and enterprises, fiscal tax reduction, moderately strengthened monetary instruments and pre positioning, all of which inject more momentum into the economy and give market confidence. At present, epidemic control, development and future response plans will still become important variables for subsequent economic recovery and development. Sustained and strong control will bring the hope of “dynamic clearing” to epidemic control. Of course, we can also see that this process has strong constraints on the economy. Epidemic prevention and control departments are committed to shortening this process to reduce the negative impact on the economy.
The annual report performance of many banks has been enhanced, and the quarterly report of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) shows that the performance continues to be strong. This week, 16 A-share listed banks officially released their annual reports for 2021, with large performance differentiation. For details, please refer to the performance announcement data in Section 2.4 of the main body of this report. However, from the overall situation, the revenue and net profit attributable to the parent company have been greatly improved, and the asset quality has been steadily optimized. This week, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released its performance forecast for the first quarter. From January to March 2022, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) operating revenue yoy + 19% and net profit yoy + 23%. By the end of March 2022, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) non-performing loan ratio was 0.81%, which corresponded to strong performance, operational stability and business expansion ability, and indirectly fed back that the overall performance of the banking sector in the first quarter of 2022 was worth looking forward to. From the current perspective, due to the disturbance of the epidemic in the short term, we believe that the phased rebound of the banking sector is not easy to exceed expectations. However, from the medium and long-term perspective, the improvement of interest income and non interest income brought by scale expansion and deepening wealth management is predictable, stable, and the risk is generally controllable. At present, the Pb level of the banking sector is still at the low level in the past decade, so the logic of the overall valuation improvement remains unchanged.
Market performance
The banking sector index rose 5.12% this week, outperforming the market. This week, the Shanghai Composite Index rose 2.19%, the Shenzhen Component Index rose 1.29%, the gem index rose 1.1%, and the Shanghai and Shenzhen 300 index rose 2.43%. The recommendations focus on high-quality joint-stock banks ( Tsingtao Brewery Company Limited(600600) 36 , Bank Of Nanjing Co.Ltd(601009) ).
Risk tips
Repeated epidemic risk, tightening monetary policy, increasing risk of non-performing rate, outbreak of major risks and events of default, etc.
