\u3000\u3 China Vanke Co.Ltd(000002) 142 Bank Of Ningbo Co.Ltd(002142) )
Event: Bank Of Ningbo Co.Ltd(002142) released the annual report of 2021 (the performance express has been disclosed previously). The annual revenue / profit before provision / net profit attributable to the parent company was 52.77/32.82/19.55 billion yuan, with a year-on-year increase of 28.4% / 30.7% / 29.9% respectively; The non-performing rate at the end of the year was 0.77%, down 1bp month on month, and the provision coverage rate was 525.5%, up 10.1pct month on month; The weighted average roe was 16.6%, up 1.7pct year-on-year.
Performance review:
From the perspective of profit dismantling, the main driving factors for the high growth of profits in the whole year are scale maintenance and rapid expansion (+ 22.1%), strong non interest growth (+ 11.0%), tax saving effects such as national debt (5.4%) and reasonable cost control (+ 2.2%). The increase in provision (- 6.4%) and the narrowing of interest margin (- 4.8%) are the two main negative factors that weaken profitability. In comparison, the company’s performance maintains the leading level of listed banks and continues to reflect high growth and strong stability.
Several points worthy of attention: (1) strong growth of non interest income. The annual non interest income was 20 billion, accounting for nearly 40% of the revenue. Among them, the net fee income was 8.26 billion, with a year-on-year increase of 30.3%, and the medium income maintained a high growth trend, mainly due to the accelerated growth of agency medium income under the accelerated layout of wealth management business in the past two years. In addition, investment income is also an important factor supporting the high growth of non interest rates. The annual investment income and changes in fair value increased by 4.55 billion year-on-year, mainly due to the company’s strong ability to invest and allocate financial assets. From strategic orientation to personnel team and relevant financial data, it can be seen that the diversified profit growth point of the company has been gradually consolidated, which is expected to continue to support the company to achieve rapid growth. (2) The rapid expansion of assets hedges the pressure of narrowing interest rate spread. The company’s debt cost is relatively rigid, and the net interest margin narrowed 9bp to 2.21% year-on-year due to the decline in the yield of interest bearing assets. Under the background of strong credit supply capacity and strong regional credit demand, the company’s credit assets maintained rapid expansion and achieved high growth of net interest income by volume plus price. We expect that under the downward pressure of the economy, the asset interest rate may continue to decline. Considering that the company has completed the allotment of shares in 21q4, the capital strength is strong, and the credit demand in the region is still good, it is expected to continue to supplement the price by volume to achieve a rapid growth of net interest income. (3) The provision for debt investment has been strengthened. The year-end non-performing rate and concerned loan rate are very low in the industry with 0.77% and 0.48% respectively. The NPL generation rate after write off was only 0.71% in the whole year, and the asset quality continued to be excellent. The company maintained the principle of prudence and maintained the strength of loan provision. The annual loan impairment loss was 9.68 billion, an increase of 26.2% year-on-year. The loan allocation ratio and provision coverage maintain the industry-leading level. In addition, the provision for debt investment was strengthened, and the annual asset impairment loss increased by 42.8% year-on-year. The full caliber provision safety cushion is further thickened.
Core logic:
Deeply plough the Yangtze River Delta and fully benefit from regional economic development Bank Of Ningbo Co.Ltd(002142) has formed a “one body and two wings” pattern with the Yangtze River Delta as the main body and the Pearl River Delta and the Bohai Rim as the two wings. At present, more than 90% of its business is concentrated in the Yangtze River Delta. With developed private economy and strong financial demand in the region, the company will fully benefit from the rapid development of regional economy.
The system and mechanism are better and the degree of marketization is high Bank Of Ningbo Co.Ltd(002142) equity structure is diversified, and the equity structure of mutual checks and balances among state-owned assets, foreign capital and private enterprises has been formed earlier. The shareholding ratio of senior executives is high, and the employee assessment mechanism continues to be optimized. A better market-oriented incentive mechanism will promote the efficient implementation of the company’s strategies.
Adhering to the differentiated development strategy has formed a comparative advantage Bank Of Ningbo Co.Ltd(002142) differentiated development strategy has a clear positioning. The business strategy of “big banks can’t do well, small banks can’t do well” is appropriate, and comparative advantages have been formed in various businesses. The customer base of small and micro enterprises is solid, and the profit center of retail companies has been established earlier to realize the franchise mode of small and micro businesses. At present, small and micro businesses have mature risk control mechanism, rich product system and good market reputation. In addition, the personal consumer loan business, thanks to the company’s early and accurate customer group positioning, has achieved a higher risk return rate in the industry.
Under the focus of large retail and light capital strategy, new profit growth points have been gradually consolidated. The company regards the wealth management business as an important transformation direction, continuously enriches the talent team related to the wealth management business, increases the investment in science and technology, and has a firm strategic transformation. At present, the handling fee income of agency business has increased rapidly, and AUM of individual customers and wealth customers has made continuous breakthroughs. At the end of the year, Bank Of Ningbo Co.Ltd(002142) individual customer AUM reached 656.2 billion, with a year-on-year increase of 23%; The number of private bank customers reached 13000, with a year-on-year increase of 70%, and the Aum of private bank reached 146.4 billion, with a year-on-year increase of 53%. From the perspective of demand side, Bank Of Ningbo Co.Ltd(002142) customer service ability is strong, and the company lines and retail company lines that have been cultivated for many years have great customer potential; From the supply side, the company has strengthened institutional cooperation, and its product innovation and marketing efforts are also gradually increasing. The combination of supply and demand will promote the rapid growth of wealth management business and contribute new profit growth points.
Investment suggestion: Bank Of Ningbo Co.Ltd(002142) annual report performance continued to shine, with rapid expansion of assets, strong growth of non interest rates, further thickening of full caliber provision safety cushion and excellent asset quality. We expect that the size of Bank Of Ningbo Co.Ltd(002142) assets will maintain rapid growth under the background of the completion of share allotment and good regional credit demand, and the net interest income will grow rapidly with the volume premium; Under the guidance of large retail and light capital strategy, the company’s medium income growth is expected to maintain; The excellent investment ability of financial assets that can stand the cycle test will also thicken the company’s profitability during the period of downward interest rate. Under the principle of prudent provision, the provision for impairment shall not be reduced. Based on this judgment, the net profit attributable to the parent company in 2022 and 2023 increased by 20.6% and 18.9% respectively year-on-year, and the corresponding BVPs were 23.9 and 28.1 yuan / share respectively. Considering the high growth attribute brought by the company’s region, institutional mechanism, strategic positioning advantages and transformation and development potential, the company is given a target valuation of 2.2x Pb in 2022, corresponding to the share price of 52.6 yuan, maintaining the “strongly recommended” rating.
Risk tip: the economic stall and downturn lead to the deterioration of asset quality; The spread of the epidemic has a serious impact on the normal operation; Unexpected changes in regulatory policies, etc.
