\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 919 Bank Of Jiangsu Co.Ltd(600919) )
Event:
On April 12, Bank Of Jiangsu Co.Ltd(600919) released its annual report for 2021. In 2021, it achieved an operating revenue of 63.771 billion yuan, a year-on-year increase of 22.6%, and a net profit attributable to the parent company of 19.694 billion yuan, a year-on-year increase of 30.7%.
Comments:
Revenue and profit continued to increase. The year-on-year growth rates of Bank Of Jiangsu Co.Ltd(600919) revenue and net profit attributable to the parent company in 2021 were 22.6% and 30.7% respectively, with year-on-year growth rates of – 2.1 and 0.2pct respectively compared with the first three quarters of 21 years. Among them, the year-on-year growth rates of 21q4 single quarter revenue and parent net profit were 17.1% and 31.5% respectively, with changes of – 6.3 and 18pct respectively compared with the same period of the previous year. The growth rate of the revenue side slowed down but remained relatively high. From the perspective of performance split: (1) in 2021, the contribution of scale to profit was 31%, increased by 0.5pct compared with the first three quarters, and the contribution of interest margin was 23.4%, decreased by 6.1pct compared with the first three quarters, reflecting that under the marginal pressure of interest margin, Bank Of Jiangsu Co.Ltd(600919) “compensating price by volume” has achieved a stable and good profit; (2) The contribution of non interest income was 21.4%, up 6.4pct from the first three quarters, which was mainly due to the growth of capital gains brought by the decline of bond interest rate in the fourth quarter of last year. (3) The provision contribution was 0.7%, an increase of 9.5pct compared with the first three quarters, feeding the profit growth to a certain extent.
Credit growth remained high. At the end of 2021, the year-on-year growth rate of Bank Of Jiangsu Co.Ltd(600919) total assets was 12.0%, a decrease of 1.99pct compared with the end of 21q3, but the month on month growth rate of total assets increased by 0.24pct compared with the end of 21q3, reflecting the increase of 21q4 table expansion compared with 21q3. Considering that the year-on-year growth rate of total assets at the end of 2020 is significantly higher than that of 20q3 by 3.58pct, and the slowdown of total assets growth at the end of 2021 may have the impact of the high base of the previous year, it is speculated that the company will increase its table expansion after 20q4 allotment funds are in place. At the end of 2021, the year-on-year growth rate of loans was 16.5%, with a month on month decrease of 0.53pct, but a year-on-year increase of 1.04pct.
We have focused on increasing the layout of retail non mortgage areas. In terms of structure, Bank Of Jiangsu Co.Ltd(600919) 2021 made moderate adjustments in the second half of the year, focusing on increasing the distribution of retail loans:
First, the investment in corporate loans slowed down. In the second half of 2021, the new scale was – 28.27 billion, a year-on-year decrease of about 2.5 billion. In terms of industry investment, the field with good credit growth is still manufacturing, with a new scale of 5.21 billion, an increase of 8.06 billion year-on-year. Real estate loans increased by – 10.89 billion, with the highest decline among all corporate loans, which is also related to the increased risk of credit default in the real estate market last year. The new scale of wholesale and retail, leasing and business services was – 9.05 billion and – 8.68 billion respectively, with a negative growth rate second only to the real estate industry, which may be related to the epidemic and the introduction of the “No. 15 document” of the urban investment platform.
Second, among retail loans, mortgage loans increased by 6.9 billion, a year-on-year decrease of 15.23 billion, but personal consumer loans increased by 37.26 billion, a year-on-year increase of 10.33 billion. It can be seen that under the downward pressure of overall credit pricing, Bank Of Jiangsu Co.Ltd(600919) through appropriate adjustment of credit structure, allocate credit resources to retail non mortgage loans with high pricing, which will help stabilize the company’s Nim and net interest income.
Third, we have focused on increasing the credit supply in Jiangsu. In the second half of 2021, the new scale of credit extension in Jiangsu was 73.07 billion, an increase of 19.84 billion year-on-year, which also laid a good foundation for the quality of the company’s assets.
Nim runs basically stably. The NIM of the company in 2021 was 2.28%, a slight decrease of 1bp compared with the first half of the year and an increase of 14bp compared with 2020. Among them, the loan yield was 5.36%, a decrease of 4bp compared with the first half of the year, and the deposit cost rate was 2.32%, an increase of 1bp compared with the first half of the year. Under the pressure of pricing at both ends of deposits and loans, the company stabilized Nim by “compensating price by volume” and optimizing credit structure. Last year, the decline of Q4 financial market interest rate also helped to improve the cost of interbank liabilities.
Non performing loans showed a “double drop”, and the provision coverage rate rose to 308%. At the end of 2021, the balance of Bank Of Jiangsu Co.Ltd(600919) non-performing loans was about 15.1 billion yuan, a decrease of about 200 million yuan month on month, and the non-performing loan ratio was 1.08%, with a year-on-year and month on month decrease of 24bp and 4bp respectively, Bank Of Jiangsu Co.Ltd(600919) non-performing loans achieved “double decline”, and the non-performing loan ratio has improved significantly quarter by quarter since the second half of 20 years. The provision coverage ratio increased by 12.19 PCT to 307.7% month on month, and the loan allocation ratio increased by about 0.03 PCT to 3.33% month on month. The company’s risk offset ability was further enhanced.
There is a large space for convertible bonds to convert into shares, and the company has great potential growth momentum. By the end of 2021, only 691000 yuan of the company’s 20 billion yuan convertible bonds had been converted into shares. At this stage, the conversion price and positive share price of Bank of Jiangsu’s convertible bonds are 6.37 and 6.44 yuan / share respectively, and the corresponding conversion value is about 101.10 yuan. It is expected that the company will realize the conversion in an orderly manner in 2022. Under static calculation, if the core Tier-1 capital is included in the proportion of 5% ~ 10%, the company’s core Tier-1 capital adequacy ratio still has 6BP ~ 12bp to improve. With the consolidation of the capital base, the company’s business space will be expanded, and its performance will have greater potential growth momentum.
Earnings forecast, valuation and rating Bank Of Jiangsu Co.Ltd(600919) as a leading city commercial bank in Jiangsu and Zhejiang, it is deeply engaged in the economically developed areas of the Yangtze River Delta. In the high-end manufacturing loan business, it has a moat, the credit supply is “prosperous in both supply and demand”, and Nim has a stable operation foundation. High yield areas such as retail consumer loans continue to make efforts, and the overall layout of the wealth management sector continues to expand. The company has entered the “fast lane” of development. With the continuous excellent performance of the company’s profits, the subsequent core tier 1 capital is expected to be further supplemented, and the business expansion remains at a rapid level. Therefore, we maintain the EPS forecast of 1.62 yuan and 1.93 yuan from 2022 to 2023, add the EPS forecast of 2.21 yuan in 2024, and the corresponding Pb of the current stock price is 0.63/0.55/0.49 respectively, maintaining the “buy” rating.
Risk tip: credit easing is less than expected, and the downward pressure on the economy is increasing.
