\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 926 Bank Of Hangzhou Co.Ltd(600926) )
Abstract of annual report: Bank Of Hangzhou Co.Ltd(600926) 2021 net profit increased by 29.8% year-on-year, and operating revenue increased by 18.4% year-on-year; The cost income ratio is 27.3%. At the end of the year, the total assets were 1.39 trillion yuan, an increase of 18.9% over the beginning of the year, loans increased by 21.7% and deposits increased by 16.1%. The year-end non-performing rate was 0.86%, the provision coverage rate was 568%, and the core tier 1 capital adequacy ratio was 8.43%. Roe 12 in 202133%, up 1.19 percentage points year-on-year. The cash dividend rate in 2021 is 24.55%.
Bank Of Hangzhou Co.Ltd(600926) net profit growth rate remains at the forefront of the industry, asset quality remains excellent, provision coverage is as high as 568%, ranking the leading level in the industry, supporting the sustainability of brilliant performance. The company’s regional location is superior, and the credit growth is accelerated again. We are optimistic about the company’s future regional development advantages and growth, and maintain the company’s buy rating.
Key points supporting rating
The performance was beautiful, and the proportion of non interest income increased
Bank Of Hangzhou Co.Ltd(600926) annual net profit increased by 29.8% year-on-year, further improved compared with the first three quarters (+ 26.2%, YoY), and the growth rate was in the forefront of listed banks. In 2021, the net fee income achieved a rapid growth of 19.7%. Benefiting from the rapid development of agency business, the custody fee income increased by 29% year-on-year. In 2021, non interest income accounted for 28.4% of revenue, an increase of 6.05 percentage points over 2020. The company’s annual net interest income increased by 9.2% year-on-year, which continued to slow down compared with the first three quarters (+ 11.2%, YoY), mainly affected by the narrowing of interest margin.
High increase in deposits and loans, pay attention to the conversion of bonds into shares
Bank Of Hangzhou Co.Ltd(600926) loans grew strongly, with a year-on-year increase of 21.5%; Deposits increased by 16.1% year-on-year, and the growth rate also ranks in the forefront of listed banks. With the rapid expansion of business, the core tier 1 capital adequacy ratio at the end of the year was 8.43%, which was at a low level of listed banks. We believe that benefiting from regional economic advantages, the scale of the company is expected to continue to maintain high growth. We suggest paying attention to the process of converting RMB 15 billion convertible bonds into shares of the company. On April 15, the closing price of the company was 15.3 yuan, which was 9.4% lower than the redemption price of convertible bonds.
Valuation
Considering Bank Of Hangzhou Co.Ltd(600926) excellent asset quality improvement performance and strong credit demand, we raised the company’s EPS to 1.95/2.38 yuan in 2022 / 2023 (formerly 1.81/2.18 yuan), and the current stock price is 1.14x/1.02x corresponding to Pb in 2022 / 2023, maintaining the buy rating.
Main risks of rating
The deterioration of asset quality caused by economic downturn exceeded expectations; Regulatory control exceeded expectations.
