\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 926 Bank Of Hangzhou Co.Ltd(600926) )
Event:
On April 15, Bank Of Hangzhou Co.Ltd(600926) released its annual report for 2021, which realized an operating revenue of 29.361 billion in 2021, with a year-on-year increase of 18.4%; The net profit attributable to the parent company was 9.261 billion yuan, a year-on-year increase of 29.8%. The weighted average return on net assets was 12.33%, an increase of 1.19 percentage points year-on-year.
Comments:
Operating revenue maintained a strong momentum, and the year-on-year growth rate of profit rose to nearly 30%
2021 is the year when Bank Of Hangzhou Co.Ltd(600926) a new round of five-year strategic planning (20212025) will set sail. Guided by the “second five year plan” strategy, the company will promote the implementation of the strategy. The annual revenue, net profit before provision and net profit attributable to the parent company have a year-on-year growth rate of 18.4%, 17.2% and 29.8% respectively, and the growth rate is – 1.6pct, – 2.8pct and 3.6pct respectively compared with 1-3q, of which the single quarter revenue and net profit attributable to the parent company of 4q have a year-on-year growth rate of 13.5% and 42.7% respectively. Revenue growth has maintained a strong momentum, and profit growth has increased quarter by quarter since the end of 2020. At the business level, in 2021, corporate finance continued to play a role as a ballast for the whole bank’s business revenue, the revenue of retail financial consignment increased steadily, small and micro finance made efforts, and credit small and micro businesses drove the growth of high-yield assets, and a new round of five-year strategic planning started smoothly.
From the perspective of year-on-year growth of net profit, the positive contribution of scale expansion and non interest income was further strengthened, the drag of net interest margin, operating expenses and income tax was expanded compared with 1-3q21, and the negative drag of provision was significantly narrowed.
The asset side maintained a strong expansion momentum, and the net interest income increased by 9.2% year-on-year
1) the asset side maintained strong expansion momentum, and the proportion of loans was roughly flat. At the end of 2021, the year-on-year growth rates of Bank Of Hangzhou Co.Ltd(600926) total assets, interest bearing assets and loans were 18.9%, 19.4% and 21.7% respectively, with changes of -0.8pct, – 0.4pct and 2.1pct respectively compared with the end of 3q. Among them, the new loan of 4q in a single quarter was 25.101 billion yuan, an increase of 12.576 billion yuan year-on-year, benefiting from the strong economic vitality of the region, the strong capital demand of enterprises and residents, and the strong growth of credit supply. In terms of loan structure, corporate loans and personal loans increased by 50.878 billion yuan and 36.124 billion yuan respectively compared with the end of the previous year. Among the new loans, the proportion of public and retail loans was roughly 10:7, and the proportion of personal loans increased by 1.1pct to 38.1% quarter on quarter, down 0.8pct compared with the end of the previous year. In terms of regional distribution, the proportion of loan balance in total loans in Jiangsu and Zhejiang increased by 3.17pct to 72.94% compared with the end of the previous year, of which loans in Hangzhou accounted for 45.96%. Bank Of Hangzhou Co.Ltd(600926) credit resources are mainly focused on economically developed areas, and the overall financial credit environment is good.
2) the ability to acquire core liabilities is strong, and the deposit cost rate is 12 BP lower than that in 2020. At the end of 2021, Bank Of Hangzhou Co.Ltd(600926) total liabilities, interest bearing liabilities and deposits increased by 19.5%, 20.3% and 16.1% year-on-year respectively, and the growth rate changed by -0.9pct, -0.8pct and -0.1pct respectively compared with that at the end of 3q. Under the pressure of “stabilizing and increasing deposits” in the banking industry in 2021, Bank Of Hangzhou Co.Ltd(600926) adheres to the flow thinking to drive capital retention. The deposit growth rate at the end of each quarter in the second half of 2021 was stable at a high level of more than 16%, highlighting the strong ability to obtain core liabilities. The quarter on quarter ratio of deposit structure was generally flat, with demand deposits slightly increasing by 0.1pct to 53.5% quarter on quarter, and personal deposits slightly decreasing by 0.1pct to 16.7% quarter on quarter. In 2021, the deposit interest payment rate decreased by 12bp to 2.21% compared with the previous year.
3) the annual net interest margin recorded 1.83%, which was mainly dragged down by the decline in loan pricing Bank Of Hangzhou Co.Ltd(600926) 2021 net interest margin narrowed by 15bp compared with 2020. Specifically, the rate of return on interest bearing assets was 4.25%, down 14 BP from 2020; Among them, the loan yield was 5.11%, a decrease of 26bp compared with 2020; The large decline in loan yield is expected to be mainly affected by the cumulative effect of repeated interest rate cuts in the loan market. At the same time, the cost ratio of interest bearing debt decreased 4bp to 2.39% compared with 2020. Effective control of debt cost has formed a certain support for interest margin.
Non interest income increased by 50.4% year-on-year to 8.325 billion yuan
In terms of the composition of non interest income, the net income from handling fees and commissions in 2021 increased by 19.7% year-on-year to RMB 3.608 billion. The company actively promoted the implementation of the winning wealth strategy and benefited from the good growth of financial management business income. The Commission of custody and other entrusted businesses increased by 28.96% year-on-year, and the proportion of handling fee and commission income increased by 4.38pct to 60.93% compared with the previous year, further improving the revenue contribution. Other non interest net income increased by 87.2% year-on-year to RMB 4.717 billion, mainly due to the increase in investment income of trading financial assets and changes in asset valuation.
The non-performing loan ratio fell below 0.9%, and the provision coverage continued to be at the industry-leading level
Bank Of Hangzhou Co.Ltd(600926) adhere to the concept of “risk prevention is the premise of development, not risk for development”. By the end of 2021, the non-performing rate had decreased by 4bp quarter on quarter to 0.86%, which is a low level for listed banks. In terms of non-performing related indicators, attention was paid to the quarter on quarter decline of loan ratio by 18bp to 0.38%. The ratio of overdue loans to non-performing loans was 71.80%, down 6.36 PCT from the end of the previous year; The ratio of loans overdue for more than 90 days to non-performing loans was 64.75%, an increase of 5.70pct over the end of the previous year.
In 2021, Bank Of Hangzhou Co.Ltd(600926) accrued credit impairment loss of 10.5 billion yuan, yoy + 5.44%, including 4.719 billion yuan of credit impairment loss of loans and advances and 5.100 billion yuan of impairment loss of financial investment. By the end of 2021, the provision coverage ratio had increased by 8.3pct to 567.7% quarter on quarter, and the provision thickness remained at the leading level in the industry.
The capital adequacy ratio decreased steadily and slightly, and the marginal demand for capital supplement increased
The rapid expansion of the financial statements has intensified the capital consumption. By the end of 2021, Bank Of Hangzhou Co.Ltd(600926) core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio were 8.43%, 10.40% and 13.62% respectively, with a quarter on quarter decrease of 0.08pct, 0.16pct and 0.25pct respectively. In 2021, the company completed the issuance of 15 billion yuan of convertible bonds, which will effectively supplement the level of capital adequacy ratio at all levels of the company.
Earnings forecast, valuation and rating Bank Of Hangzhou Co.Ltd(600926) based in Hangzhou and deeply cultivated in Zhejiang, its outlets are mainly distributed in developed economic circles such as the Yangtze River Delta, the Pearl River Delta and the Bohai Bay. In recent years, with the continuous promotion of retail transformation, the growth rate of revenue and profit has been outstanding. In 2021, the new five-year strategic plan made a smooth start, with strong revenue and profit growth. Since the beginning of 2022, the “supply and demand” of credit supply is booming, which is in the process of “Pro cycle” and “positive cycle”. The superposition of “Hangzhou bank convertible bonds” has a large space for equity conversion, and the company has a large potential growth momentum. Combined with the 2021 annual report, the company raised its EPS forecast for 202223 to 1.92 yuan (+ 1.6%) / 2.34 yuan (+ 5.9%), increased its EPS forecast for 2024 to 2.82 yuan, and the current Pb valuation corresponding to the stock price was 1.12/0.98/0.86 times respectively, maintaining the “buy” rating.
Risk tip: if the negative impact of the epidemic on the economy of the Yangtze River Delta exceeds expectations, it may drag down the pace of corporate credit supply, and the increased downward pressure on the economy may also affect the quality of assets.
