Review of the banking sector: the banking index continued to strengthen, rising 1.2% this week, outperforming the Shanghai and Shenzhen 300 index by 2.21pct. Since the meeting of the Finance Committee on March 16, northbound funds have increased their positions in the banking sector for four consecutive weeks, and the market value of bank shares has increased by 18.926 billion yuan, ranking first in all sectors. On the performance of individual stocks, Qilu Bank Co.Ltd(601665) (+ 17.6%), Bank Of Nanjing Co.Ltd(601009) (+ 5.4%), Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) (+ 4.9%), Ping An Bank Co.Ltd(000001) (+ 4.1%) and other gains were among the top.
Improve the top-level design of financial stability, promote financial stability legislation and establish stability funds. This week, the people’s Bank of China issued the financial stability law of the people’s Republic of China (Draft for comments), which mainly includes:
1) improve the working mechanism of financial stability and meet the responsibility requirements of all parties. Establish the overall planning status of the financial commission of the State Council and clarify the institutional arrangements in the three stages of financial risk prevention, resolution and disposal; Responsibilities of all parties: A. consolidate the main responsibilities of financial institutions and their major shareholders and actual controllers, and strengthen the requirements of access and supervision; b. Consolidate the territorial and stability maintenance responsibilities of local governments, and take the initiative to resolve regional financial risks in a timely manner; c. Consolidate the supervision responsibility of the financial supervision department, strictly prevent, correct and dispose of risks in time;
2) build a disposal fund pool and establish a financial stability guarantee fund. Adhere to the principle that “in dealing with risks, financial institutions should rescue themselves first, and then take external assistance to reduce dependence on public funds”, and resolve risks in a progressive order of “self rescue of institutions under Resolution – market-oriented capital M & A and reorganization – local public resources – financial stability guarantee fund”. Establish a financial stability guarantee fund to operate and cooperate with the existing deposit insurance fund and industry guarantee fund. The financial stability guarantee fund is composed of funds raised from financial institutions, financial infrastructure and other entities, as well as other funds prescribed by the State Council, and is under the overall management of the financial commission of the State Council;
3) establish a market-oriented and legalized risk disposal mechanism and strengthen the accountability for violations of laws and regulations. Clarify the write down order of equity and creditor’s rights, and the legitimate rights and interests of shareholders, creditors and relevant stakeholders. The preliminary analysis of the draft for comments is as follows: 1) after the consultation, it will be revised into a draft and released according to judicial procedures; At the same time, the financial stability guarantee fund will be led by the people’s Bank of China, and the Ministry of Finance and the China Banking and Insurance Regulatory Commission will be responsible according to their respective responsibilities. The work related to fund raising will be completed by the end of September and will continue to be promoted during the year. 2) Based on the current risk situation, promote the legislation of financial stability, and solicit opinions before the national financial stability working conference, which releases the policy signal to a certain extent. The financial working conference may focus on the prevention and disposal of financial risks.
The national standing committee pointed out the new direction of monetary policy: on April 6, the national standing committee pointed out that we should make timely and flexible use of various monetary policy tools such as refinancing, give better play to the dual functions of aggregate and structure, and increase support for the real economy. We believe that: 1) in terms of total amount, stabilizing credit is still a top priority. We maintain the judgment that the new credit supply will switch from “stable increment” to “stable growth” in 2022. It is expected that the new credit will be 21.5-22 trillion in the whole year, and the loan growth rate will be about 11.5%; 2) Structurally, the monetary policy focuses on structural arrangements, which will increase the re lending of agricultural and small expenditure, set up new special re loans for scientific and technological innovation and inclusive pension, and the people’s Bank of China will provide 60% and 100% of the loan principal respectively; This week, the CBRC issued a work notice on Promoting Rural Revitalization and supporting the development of small and micro enterprises. It also mentioned strengthening credit supply in relevant fields and guiding credit resources to key areas and weak links of the economy. 3) In terms of pricing, the contradiction between supply and demand will push down the interest rate of new loans under the background that the effective credit demand has yet to be repaired and the credit supply has increased.
Suggestions on investment in bank stocks: 1) after entering 2q, the “steady growth” has entered a critical period, and “wide credit” is still the core. The regulatory level encourages banks to increase credit supply and superimpose more infrastructure investment projects to form effective demand; 2) Although there is great downward pressure on asset side pricing, there may be new policies for debt cost control to stabilize bank Nim; 3) The real estate sector continued to perform under the policy warm wind, forming a resonance with bank stocks. With the recovery of the epidemic, real estate sales are likely to recover in 2Q, promoting the recovery of mortgage demand month by month; 4) Some potential problem loans are “fully developed”, and it is expected that the asset quality of listed banks will not change much in 1q financial reporting quarter. The banking stock market is expected to continue, and two main lines will continue to be recommended: 1) Jiangsu and Zhejiang high-quality banks with “Pro cycle and high growth”, with emphasis on Nanjing, Changshu, Jiangsu and Bank Of Hangzhou Co.Ltd(600926) ; 2) As the main line of big banks with obvious advantages in credit supply and debt side, Postal Savings Bank Of China Co.Ltd(601658) , it is recommended to pay attention to H-share big banks.
Risk warning: the economic growth rate is lower than expected; Real estate risk situation disturbance; Financial profit giving entities exceeded expectations.
