\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 009 Bank Of Nanjing Co.Ltd(601009) )
Event:
On April 15, Bank Of Nanjing Co.Ltd(601009) released the annual report of 2021 and the first quarterly report of 2022:
(1) in 2021, the operating revenue was 40.925 billion yuan, with a year-on-year increase of 18.7%, and the net profit attributable to the parent company was 15.857 billion yuan, with a year-on-year increase of 21%.
(2) in the first quarter of 2022, the operating revenue was 12.277 billion yuan, a year-on-year increase of 20.4%, and the net profit attributable to the parent company was 5.015 billion yuan, a year-on-year increase of 22.3%
Comments:
22q1’s revenue profit is “higher” than that in 2021 Bank Of Nanjing Co.Ltd(601009) is the first company among A-share listed banks to disclose the annual report of 2021 and the first quarterly report of 2022 at the same time. In terms of performance, the growth rate of revenue and profit in the first quarter of 2022 reached “double 20”, and “improved” on the basis of 2021. From the split of Q1 performance in 2022: (1) the contribution of scale to profitability remains at a high level of about 25%, which is little changed compared with the whole year of 2021, but the contribution of interest margin to profitability has declined, which is – 26.5%, compared with 0.1% in the whole year of 2021, indicating that Bank Of Nanjing Co.Ltd(601009) under the pressure of interest margin, has maintained the stable growth of profits through “compensating price by volume”. (2) The contribution of non interest income to profitability increased significantly, to 51.3%, an increase of 27.7pct compared with 2021. (3) The contribution of provision to profit is – 18%, which is about 13pct lower than that in 2021. Generally speaking, Bank Of Nanjing Co.Ltd(601009) revenue and profit continued the trend of high growth, which not only had the influence of Q1 low base effect in 2021, but also reflected the strength of Bank Of Nanjing Co.Ltd(601009) as a “top listed city commercial bank” in Jiangsu. Especially when the epidemic in China spread periodically and had a certain impact on the economy of the Yangtze River Delta, the company’s operating performance was still beautiful.
Credit growth remained high, focusing on increasing the layout of retail business. The year-on-year growth rates of Q1 Bank Of Nanjing Co.Ltd(601009) credit in 2021 and 2022 were 17.2% and 17.7% respectively, continuing the trend of high growth. From the whole year of 2021, the company’s credit lending boom is good, with various loans increasing by 115735 billion yuan, an increase of about 10 billion yuan year-on-year, of which corporate + retail loans increased by 119168 billion yuan, an increase of 28.313 billion yuan year-on-year, and bill financing decreased significantly, indicating that the company’s credit structure is also “solid”. In terms of corporate loans, the company mainly invested in leasing, business services, manufacturing and infrastructure in 2021, with a total new scale of 66.827 billion yuan, accounting for 83.47% of corporate loans. At the same time, the industries greatly affected by the epidemic in 2020, such as wholesale and retail, will also pick up in 2021. In terms of retail loans, with the recovery of the epidemic, the company significantly increased the layout of credit cards and consumer loans in 2021, with a total new scale of 26.579 billion yuan, an increase of 15.646 billion yuan year-on-year, while personal business loans decreased, and mortgage loans increased by 10.742 billion yuan, an increase of 1.574 billion yuan year-on-year. From Q1 in 2022, loans increased by 83.23 billion yuan, a year-on-year increase of 15.877 billion yuan, corporate + bills increased by 79.18 billion yuan, a year-on-year increase of 26.717 billion yuan.
Nim operation is under pressure, but the debt cost has improved significantly. In 2021 and 2022, the NIM of Q1 company was 1.88% and 1.83%, showing a certain downward pressure. The estimated value shows that the rate of return on interest bearing assets in Q1 in 2022 is 3.71%, a decrease of 26bp compared with 2021. However, this situation is the pressure point faced by the whole banking industry, that is, under the background of the increasing contradiction between credit supply and demand at the beginning of the year + LPR quotation, the continuous reduction in December 2021 and January 2022 and the heavy use of refinancing tools, the loan interest rate is facing great downward pressure, which has a certain impact on the interest margin of the banking industry. However, we can still see that the cost of Bank Of Nanjing Co.Ltd(601009) liabilities has been significantly improved in Q1 in 2022. The estimated value shows that the cost ratio of interest bearing liabilities is 2.39%, a decrease of 14bp compared with 2021. This is mainly due to Bank Of Nanjing Co.Ltd(601009) ‘s advantages in large retail and trading banks. Through product innovation and channel advantages, it has strengthened the absorption of high-quality core deposits. In 2022, the proportion of Q1 demand deposits was 29.2%, an increase of 0.86pct compared with 2021.
Non interest income increased significantly, demonstrating Bank Of Nanjing Co.Ltd(601009) strong investment ability in financial market. The year-on-year growth rates of non interest income of Q1 company in 2021 and 2022 were 28.3% and 66.2% respectively. Among them, the year-on-year growth rates of net handling fee and commission income were 16.8% and 11.2% respectively, while the year-on-year growth rates of net other non interest income were 38.1% and 133.9% respectively. Of course, this has the influence of base effect. For example, due to the “small money shortage” in Q1 in 2021, the bond interest rate once rose in a pulse, which reduced the year-on-year growth rate of net other non interest income to – 51.3%. However, based on the average value of the two years, the average year-on-year growth rate of net other non interest income in Q1 and Q1 in 2021 was 41.3%, while the average growth rate in 2020 and 2021 was 10.4%, reflecting the “strong” of corporate bond investment ability. It is expected to better grasp the band opportunity in Q1 this year and realize the floating profit of bond investment.
Asset quality continued to improve and provision coverage was further consolidated. In 2021 and 2022, Q1, Bank Of Nanjing Co.Ltd(601009) non-performing rates were 0.91% and 0.9% respectively, which remained at a low level. The Q1 NPL + concern rate in 2022 was 1.9%, a decrease of 23bp compared with 2021. The net generation rate of non-performing assets in 2021 was 0.75%, which was 9 BP lower than H1 in 2021. The provision coverage of Q1 in 2021 and 2022 were 397.34% and 398.41% respectively, showing a steady upward trend. In 2022, the Q1 credit impairment loss increased by 3.244 billion, 742 million more than the same period last year, the net non-performing balance increased by 620 million, and the dynamic provision coverage rate exceeded 400%. This reflects that the overall asset quality of the company continues to improve, and the company’s better profit performance makes it further increase the provision provision, so as to prepare for the possible impact of the subsequent epidemic on the asset quality.
There is a large space for convertible bonds to convert into shares, and the company has great potential growth momentum. As of Q1 2022, the company’s capital adequacy ratio, tier 1 capital adequacy ratio and core tier 1 capital adequacy ratio were 12.94%, 10.58% and 9.75% respectively, down 0.6, 0.49 and 0.41pct respectively compared with the end of 2021, which belongs to the normal fluctuation of the “good start” time point of the first quarter. At this stage, the conversion price and positive share price of Bank of China convertible bonds are 10.1 and 11.9 yuan / share respectively, and the corresponding conversion value is about 117.82 yuan. 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 9bp ~ 18bp to improve. With the consolidation of the capital base, the company’s business space will be expanded and its performance will have greater growth momentum.
Earnings forecast, valuation and rating Bank Of Nanjing Co.Ltd(601009) as an old listed bank in Jiangsu and Zhejiang, with complete financial licenses and high market recognition, roe has always been maintained at a high level. The company’s business development is deeply rooted in the economically developed areas of the Yangtze River Delta, and the two strategies of “big retail strategy” and “trading bank strategy” are continuously promoted. In the main urban area of Nanjing, the advantages of retail business, strong investment ability in the financial market and comprehensive business development ability make the company have strong countercyclical anti risk ability, and both profitability and asset quality can be better highlighted in comparable peers. 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 raised the EPS forecast for 20222023 to 1.87 yuan (up 3.45%) and 2.14 yuan (up 1.90%), and increased the EPS forecast for 2024 to 2.52 yuan. The corresponding Pb of the current stock price is 0.95/0.84/0.74 respectively, maintaining the “buy” rating.
Risk tip: credit easing is less than expected, and the downward pressure on the economy is increasing.
