On January 5, Bank Of Chengdu Co.Ltd(601838) disclosed the first performance forecast of listed banks in 2021.
The bank expects that the net profit attributable to the parent company in 2021 will increase by RMB 1.085 billion to RMB 1.507 billion, a year-on-year increase of 18% – 25%; The net profit attributable to the parent company after deducting non profits will increase by RMB 1.090 billion to RMB 1.512 billion year-on-year, with a year-on-year increase of 18% – 25%.
It is worth noting that the above performance growth preliminarily calculated by Bank Of Chengdu Co.Ltd(601838) will significantly exceed its performance growth in 2020. According to the previous disclosure, in 2020, the net profit attributable to the shareholders of the parent company was RMB 6.025 billion, a year-on-year increase of RMB 474 million, an increase of 8.53%.
In the context of good performance, the bank’s convertible bonds have been approved, and the capital adequacy index may rise after equity conversion. Although the asset quality of the company remained stable, by the end of June 2021, the bank’s two housing related loans had exceeded the red line. In addition, attention should also be paid to the liquidation and reduction of major shareholders.
after the approval of convertible bonds for share conversion in the future, the capital adequacy index may rise
At the end of December 2021, Bank Of Chengdu Co.Ltd(601838) issued the reply on approving Bank Of Chengdu Co.Ltd(601838) public issuance of convertible corporate bonds issued by the CSRC, which approved the bank to issue convertible corporate bonds with a total face value of 8 billion yuan to the public for a period of 6 years. After the convertible bond holders convert their shares, they will be used to supplement the company’s core Tier-1 capital according to the requirements of customs and supervision.
By the end of September 2021, Bank Of Chengdu Co.Ltd(601838) capital adequacy ratio, tier 1 capital adequacy ratio and core tier 1 capital adequacy ratio were 12.69%, 9.50% and 8.34% respectively, down 1.54%, 1.15 and 0.92 percentage points respectively compared with the end of the previous year. Among them, tier 1 capital adequacy ratio and core tier 1 capital adequacy ratio are close to the regulatory red line.
Figure 1: 2017-2021q3 Bank Of Chengdu Co.Ltd(601838) capital adequacy ratio
In addition, according to the data of China Banking and Insurance Regulatory Commission, by the end of the third quarter of 2021, the core Tier-1 capital adequacy ratio of commercial banks (excluding foreign bank branches) was 10.67%, the Tier-1 capital adequacy ratio was 12.12%, and the capital adequacy ratio was 14.80%. The three indicators of Bank Of Chengdu Co.Ltd(601838) were lower than the average level of commercial banks.
After the approval of convertible bonds, the bank’s capital adequacy index may be improved.
asset quality is stable, and the indicators of housing related loans are still “beyond the line”
In recent years, the asset quality of Bank Of Chengdu Co.Ltd(601838) has remained stable.
By the end of September 2021, Bank Of Chengdu Co.Ltd(601838) NPL ratio was 1.06%, down 0.31 percentage points from the end of the previous year; The provision coverage rate was 387.41%, an increase of 93.98 percentage points over the end of the previous year.
Figure 2: Bank Of Chengdu Co.Ltd(601838) NPL ratio and provision coverage in recent years
Although the asset quality of the bank remained stable, it is worth noting that by the end of June 2021, Bank Of Chengdu Co.Ltd(601838) real estate loans and personal housing loans exceeded the regulatory upper limit, and the regulatory authorities also inquired about the bank.
At the end of 2020, the banking real estate loan concentration management system was promulgated, Bank Of Chengdu Co.Ltd(601838) belongs to the third tier of small Chinese funded banks and non County Rural cooperative institutions, with the upper limit of real estate loans being 22.5% and individual housing loans being 17.5%. According to the calculation criteria of financial report disclosure, by the end of June 2021, Bank Of Chengdu Co.Ltd(601838) accounted for 29.44% of real estate loans and 22.20% of individual housing loans respectively, both exceeding the regulatory upper limit.
Figure 3: proportion of Bank Of Chengdu Co.Ltd(601838) real estate loans and personal housing loans at the end of June 2020 and 2021
In response, Bank Of Chengdu Co.Ltd(601838) said in the reply to the feedback on convertible bonds that the high proportion of the bank’s real estate loans is mainly due to the high scale and proportion of individual housing loans. In addition, Bank Of Chengdu Co.Ltd(601838) insisted on the orderly development of relevant businesses in the real estate field in compliance with the new regulations on real estate concentration. Personal housing loans mainly meet the reasonable home purchase needs of residents in Sichuan, Shaanxi and Chongqing. Due to its long-term good performance in mortgage service process and loan efficiency, it has formed a good market reputation and attraction, It drives the growth of individual housing loans, resulting in a relatively high proportion of real estate loans, which is reasonable.
Regulators have also set a transition period for institutions that exceed the ceiling. By the end of December 2020, if the proportion of real estate loans and personal housing loans in banking financial institutions exceeds the regulatory requirements by 2 percentage points or more, the business adjustment transition period is 4 years, and a regional differential adjustment mechanism is established.
major shareholders continue to reduce their holdings
In addition, the major shareholders of Bank Of Chengdu Co.Ltd(601838) have continued to reduce their holdings since this year.
At the beginning of December 2021, Bank Of Chengdu Co.Ltd(601838) issued the announcement on the results of shareholders’ reduction of shares through centralized bidding. The announcement shows that from September 3, 2021 to December 2, 2021, Bohai fund has reduced 36122469 Bank Of Chengdu Co.Ltd(601838) shares through centralized bidding, with a reduction ratio of 1.00% and a total reduction amount of about 429 million yuan. As of December 2, 2021, the company’s shares held by Bohai fund have decreased to 0 shares.
Figure 4: reduction of Bohai fund
In addition, according to the third quarterly report, the top ten shareholders of Bank Of Chengdu Co.Ltd(601838) Beijing Energy Group Co., Ltd. and Shanghai Dongchang Investment Development Co., Ltd. reduced their holdings of 28 million shares and 300000 shares respectively. After the reduction, the shareholding ratio of the two companies decreased to 3.43% and 3.02%.
(source: Xinhua Finance and Economics)
