\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 288 Agricultural Bank Of China Limited(601288) )
Event:
On March 30, Agricultural Bank Of China Limited(601288) released its annual report for 2021. The annual operating revenue was 719915 billion yuan, yoy + 9.4%, and the net profit attributable to the parent company was 241183 billion yuan, yoy + 11.7%. The weighted average return on net assets was 11.57%, yoy + 0.22pct.
Comments:
The revenue growth rate increased quarter by quarter, and the profit growth rate remained high. In 2021, Agricultural Bank Of China Limited(601288) revenue increased by 9.4% year-on-year to RMB 719915 billion, and net profit attributable to parent company increased by 11.7% year-on-year to RMB 241183 billion. The year-on-year growth rate was 0.1 and – 1.2pct respectively compared with that of 1-3q21, of which the year-on-year growth rates of net interest income and non interest income were 6.0% and 25.7% respectively, 0.1 and 0.9pct respectively compared with that of 1-3q21. Split the year-on-year growth structure, with scale expansion and non interest income as the main contribution sub items, driving the performance growth of 20.5 and 13.9pct respectively. On a month on month basis, the growth rate of the company’s revenue further strengthened, mainly benefiting from the “simultaneous rise in volume and price” of net interest income in the fourth quarter, while non interest income continued its strong performance in the previous period; Profit growth decreased slightly quarter on quarter, mainly due to the improvement of the drag on the expense side in the fourth quarter.
The asset structure was further optimized, and the proportion of credit rose to 58.9%. At the end of 2021, the total assets of the company increased by 6.9% to 29.07 trillion compared with the end of the previous year, and the growth rate increased by 0.7pct compared with the end of 21q3. In terms of single quarter changes, 4q added 80.492 billion new assets, an increase of 172198 billion year-on-year, mainly due to the growth of credit and financial investment (a total increase of 493087 billion yuan), of which 266339 billion new loans, an increase of 59.149 billion year-on-year, and the growth rate of loans increased by 0.2pct to 13.2% quarter on quarter, reflecting a strong ability of credit supply. The proportion of loans in interest bearing assets increased by 0.5pct to 58.9% compared with the end of the previous quarter, and the overall asset structure was further optimized.
Corporate credit resources were inclined to low-risk assets, and the proportion of retail credit increased to 41.5%. In terms of credit structure, 1) domestic corporate loans increased by 1.03 trillion yuan in the whole year, with a year-on-year decrease of 5.172 billion yuan. Credit resources focused on credit fields with excellent asset quality and strong countercyclical attribute. The new loans of leasing and business services, transportation, warehousing and postal industry accounted for the top, accounting for 22.7% and 22.4% respectively. At the same time, the company increased its investment in manufacturing industry, accounting for 16.3%; 2) Domestic retail credit increased by 918469 billion in the whole year, an increase of 112199 billion year-on-year. The proportion of retail credit increased by 0.4pct to 41.5% quarter on quarter. New personal loans were mainly concentrated in personal housing loans and farmers’ loans, accounting for 63.2% and 18.3% respectively.
The proportion of market liabilities increased, and the proportion of retail deposits rose to 59.9%. At the end of 2021, the total liabilities and deposits of the company increased by 6.6% and 7.4% respectively compared with the end of the previous year, and the growth rate increased by 0.5 and 1.5pct respectively compared with the end of 21q3. In terms of liability structure, the company moderately expanded the source of active liabilities in the fourth quarter. The proportion of deposits, bonds payable and interbank liabilities were 83.7%, 5.8% and 10.5% respectively, of which the proportion of interbank liabilities increased by 0.4pct compared with the end of the previous quarter. In terms of deposit structure, retail deposits and corporate deposits accounted for 59.9% and 37.2% respectively, and the proportion of retail deposits increased by 0.1pct compared with the end of the previous quarter.
Nim maintains strong toughness. In 2021, under the background of reducing fees and transferring profits and insufficient effective demand of the real economy, the asset side pricing of the company was under pressure. However, thanks to the optimization of asset structure, the asset side yield showed a stable and rising trend in the second half of the year. The yield of interest bearing assets in 2021 was 3.70%, a decrease of 5bp compared with 2020, but an increase of 1bp compared with 1h21. The cost ratio of the company’s interest bearing liabilities also increased, but thanks to the effective hedging of asset side pricing, the company’s interest margin maintained strong toughness, and the net interest margin in the second half of the year remained stable at 2.12%, showing a stable operation trend.
County Finance presents a good development trend. In 2021, the growth rates of the company’s County deposits and loans were 7.5% (vs. 7.4% of the whole bank) and 17.2% (vs. 13.2% of the whole bank), respectively. The scale growth rate was higher than the average level of the whole bank, of which the loan increment reached 913007 billion, a new high since the share reform. At the same time, the deposit loan interest margin in the county area reached 2.90%, 28 BP higher than the average level of 2.62% of the whole bank, and the county finance showed a good development trend in both volume and price. Compared with economically developed areas, the financial service infrastructure in county financial areas is relatively weak, the financial needs have not been fully met, and the bargaining power of customers is weak and sticky. At the same time, with the continuous promotion of national policies such as rural revitalization, agriculture related financial business will usher in greater development space.
The investment income achieved good performance, driving the high growth of non interest income. In 2021, the company’s non interest income increased by 25.7% year-on-year to 141928 billion yuan. Among them, the net fee and commission income increased by 7.8% year-on-year to 80.329 billion yuan, mainly due to the increase in the income of financing and intelligence services such as e-commerce business, syndicate and consultants; Net other non interest income increased by 60.7% year-on-year to 61.599 billion yuan, mainly due to the increase in the investment income of equity instruments and bonds. The company achieved better capital gains thanks to the revaluation of bond asset value caused by the decline of bond market yield.
The “double drop” of adverse indicators was achieved, and the risk offset ability was further improved. By the end of 2021, the balance of Agricultural Bank Of China Limited(601288) non-performing loans was 245782 billion, a decrease of 4.381 billion quarter on quarter, the non-performing loan ratio decreased by 5bp to 1.43% quarter on quarter, and the non-performing index achieved “double decline”; The concern rate was 1.48%, which was 10 bp lower than 1h21, and the pressure of adverse formation was reduced. With the continuous improvement of asset quality, the company’s provision policy remained prudent and stable, and the provision coverage increased by 11.7pct to 299.7% compared with the end of the previous quarter, still the highest level of the four major banks, with strong risk offsetting ability.
The capital adequacy ratio increased steadily quarter on quarter. In recent years, Agricultural Bank Of China Limited(601288) continued to promote the “capital consolidation plan”. On the basis of retained profits to supplement capital, it actively expanded external capital supplement channels, and 4q21 successfully issued 40 billion yuan of perpetual bonds, further enhancing its capital strength. By the end of 2021, the company’s core Tier-1 capital adequacy ratio, Tier-1 capital adequacy ratio and capital adequacy ratio were 11.44%, 13.46% and 17.13% respectively, and the quarter on quarter ratio increased by 0.26, 0.48 and 0.43pct respectively.
Earnings forecast, valuation and rating Agricultural Bank Of China Limited(601288) county financial business is developing well, revenue growth is steady, and there is a stable source of low-cost deposit expansion. At the same time, under the background of strong expectations of “broad credit” and “stable growth” and the need to boost effective credit demand, as a large state-owned bank, ABC is expected to play the role of “head goose” in credit supply, and the loan scale is expected to be further improved. Combined with the annual report of 2021, the EPS forecast of the company from 2022 to 2023 is raised to 0.74 yuan (up 7.2%), 0.79 yuan (up 9.7%), and the new EPS forecast for 2024 is 0.83 yuan, The current share price corresponds to Pb valuation of 0.48/0.44/0.41 times respectively, maintaining the “overweight” rating.
If the macro-economic exposure exceeds the expected amount, it indicates that the potential downside risk may increase.
