Recently, a number of steady growth policies and measures have been continuously launched, reducing the reserve requirement and the upper limit of deposit interest rate, which is intended to reduce the comprehensive financing cost by alleviating the pressure on bank deposits; The provision coverage rate returns to a reasonable level, which is mainly intended to broaden the “increment” of credit. Under the impact of the epidemic, the strength of steady growth has been continuously strengthened, and the strength of financial support and profit transfer policies for the real economy has also been strengthened, but the profit transfer space of financial institutions has been limited. In addition, under the background of the prominent uncertainty of the political and economic environment outside China at the present stage and the significant increase in the importance of financial stability, the strength of relevant policies of financial support entities has been improved, mainly due to the transmission of monetary policy and the promotion of wide credit, as well as the effective transmission of early policies. Under the background that the monetary and credit environment has created a good monetary and credit environment for steady growth and other demand policies, the effectiveness transmission of follow-up policies may accelerate.
Continue to be optimistic about the bank market driven by steady growth. Individual stocks recommend high-quality urban rural commercial bank: Bank Of Chengdu Co.Ltd(601838) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Bank Of Jiangsu Co.Ltd(600919) etc. continuous recommendation of core targets: Bank Of Ningbo Co.Ltd(002142) , China Merchants Bank Co.Ltd(600036) , Postal Savings Bank Of China Co.Ltd(601658) , focusing on the value and defensive nature of large banks and undervalued targets.
Lowering the reserve requirement and adjusting the deposit interest rate is intended to reduce the comprehensive financing cost by alleviating the pressure on bank deposits.
Overall, the RRR reduction is good for the overall operation of the banking industry. At this stage, loan pricing has been strongly suppressed. Under the current debt cost, there is no room for further pressure reduction without interest rate reduction and administrative orders. At the same time, the central bank also made it clear that the current liquidity has been at a reasonable and sufficient level. The more important significance of reducing the reserve requirement is to improve the derivative of deposits, improve the debt structure and deposit cost of banks, especially small and medium-sized banks, promote banks to better support entities, and more dredge the transmission path and promote steady growth.
There are certain space restrictions on the use of statutory deposit reserve instruments, and more support will be given to small and medium-sized regional banks this time. The reduction rate is slightly lower than the market expectation. After the reduction, the statutory reserve ratio is 8.1%, and the regional small and medium-sized banks are lower. At this level, the reduction space of the statutory reserve ratio tool is limited. The non inter provincial operation of urban commercial banks and rural commercial banks benefited more, which is also aimed at the groups that need more support from small and medium-sized banks. Among the listed banks, Bank Of Qingdao Co.Ltd(002948) , Bank Of Suzhou Co.Ltd(002966) , Bank of Lanzhou, Bank Of Xi’An Co.Ltd(600928) and rural commercial banks benefited a little more, while banks with a high proportion of deposits benefited a little more. It is simply estimated that their contribution to the profit growth in 2022 is between 0.1% – 0.7%.
Referring to media reports such as China Securities Network, the self-discipline mechanism of market interest rate pricing held a meeting to encourage the floating upper limit of deposit interest rate of small and medium-sized banks to be lowered and give MPa incentives, which is intended to encourage banks with better operation to increase credit. The overall products and services of small and medium-sized banks are weaker than those of large and medium-sized banks. They are more through price competition. This time, they are not forced but encouraged to encourage banks with better operation and more stable liabilities to improve their investment. At the same time, the reduction of the upper limit of these banks will also ease the competition of deposit cost in the market and the marginal pressure of small and medium-sized banks with greater pressure.
The provision coverage rate returns to a reasonable level, which is mainly intended to broaden the “increment” of credit
The decrease of provision coverage rate feeds back profits and improves the core Tier-1 capital. At present, the excess part of the high provision coverage rate can be recorded as excess provision to support tier-2 capital. Through the decrease of provision, the provision can be transformed to improve the core Tier-1 capital, so as to improve the credit extension ability of these banks and further form the support of wide credit, which not only supports the entity, but also ensures the risk defense ability of banks. At the same time, it is estimated that if the provision is converted into core Tier-1 capital and increased investment, it is assumed that banks with a provision coverage rate of more than 350% can reduce the provision by 25% and release loans, or increase the investment by 385.6 billion yuan, which is only a theoretical calculation. The actual investment, especially the non impulse investment, will more determine the credit demand, especially the real promotion of credit derivation and cost reduction and expansion at this stage, It should play a role through the promotion of actual investment and consumer demand.
Risk tip: the economy has fallen sharply and real estate risks have erupted in an all-round way.
