Sector performance: last week, the banking sector fell 0.02%, outperforming the CSI 300 index by 0.79pct (CSI 300 index fell 0.99%); 8 / 29 of all industries are listed according to the first-class industry classification standard of CITIC. In terms of individual stocks, Jiangsu Zijin Rural Commercial Bank Co.Ltd(601860) (2.1%), China Construction Bank Corporation(601939) (1.11%), Jiangsu Jiangyin Rural Commercial Bank Co.Ltd(002807) (0.96%), Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) (0.73%), and Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) (0.55%) led the increase Industrial Bank Co.Ltd(601166) (- 10.11%), Bank Of Hangzhou Co.Ltd(600926) (- 6.75%), Bank Of Suzhou Co.Ltd(002966) (- 6.22%), Bank Of Nanjing Co.Ltd(601009) (- 5.32%), Ping An Bank Co.Ltd(000001) (- 4.88%) led the decline.
Key news tracking:
The increase of easing policy will help banks reduce the cost and increase their credit supply. Last week, the national standing committee, the central bank and the China Banking and Insurance Regulatory Commission made an intensive voice to encourage high-quality banks to reduce the provision coverage, launch a “comprehensive + targeted” RRR reduction, and encourage small and medium-sized banks to increase the upper limit of deposit interest rates. The main logic of the current policy is to reduce the cost of bank liabilities and guide banks to better support entities.
“Comprehensive + targeted” RRR reduction: reduce the capital cost of banks and guide and support the real economy. In order to increase the long-term capital sources of financial institutions and reduce the capital cost, guide financial institutions to increase their support for the real economy, especially industries and small, medium and micro enterprises seriously affected by the epidemic. The central bank decided to reduce the deposit reserve ratio by 0.25pct on April 25 (excluding financial institutions that have implemented the 5% deposit reserve ratio). In addition, for urban commercial banks without inter provincial operation and rural commercial banks with deposit reserve ratio higher than 5%, an additional 0.25 PCT will be reduced on the basis of 0.25 PCT (including five listed urban commercial banks of Bank of Suzhou, Qingdao, Zhengzhou, Xi’an and Lanzhou, as well as all listed rural commercial banks). The RRR reduction released about 530 billion long-term funds and reduced the capital cost of financial institutions by about 6.5 billion a year. Assuming that all the funds released by the RRR reduction are invested in interest bearing assets, it is estimated that it is expected to boost the interest rate difference by about 0.5bp; Urban commercial banks without inter provincial operation and rural commercial banks with deposit reserve ratio higher than 5% benefit more.
Encourage the reduction of the “deposit interest rate plus the upper limit”: according to the financial Associated Press and other media on April 15, the self-discipline mechanism of market interest rate pricing recently held a meeting to encourage the floating upper limit of deposit interest rate of small and medium-sized banks to be reduced by about 10bp; The bank making the adjustment may be beneficial to its MPa assessment, that is, it will get extra points in MPA assessment by reducing the deposit interest rate. The policy aims to regulate the competition in the deposit market, guide small and medium-sized banks to reduce deposit costs and increase support for the real economy. At present, the competition in the deposit market is still fierce, and small and medium-sized banks are under great pressure to attract deposits. The actual implementation effect of the policy is expected to be observed.
Encourage high-quality banks to “reduce provisions”, retain more capital and support the real economy. The NPC mentioned that “large banks with high provision coverage and other high-quality listed banks are encouraged to gradually return the actual provision coverage to a reasonable level”. Provision coverage ratio = provision balance / non-performing loan balance. There are two ways to reduce provision coverage ratio. 1) Molecular side: reduce provision and release more profits. Profit release can bring more dividend payment (supplement Finance) and more capital retention (supplement capital and enhance the ability of credit supply). 2) Denominator end: add bad confirmation. It is expected that at this stage, the policy will encourage molecular operation, that is, to encourage large state-owned banks to reduce provision, release more profits, retain more capital and increase credit; At the same time, appropriately improve the risk appetite, sink the loan, relax the tolerance of non-performing loans, and support the real economy, especially small, medium and micro enterprises.
Press conference of financial statistics in the first quarter: the total amount of loans increased steadily and rapidly, and the growth rate in the Yangtze River Delta was higher than that in the whole country. At the end of March, the growth rate of RMB loans was 11.4%, an increase of 8.34 trillion yuan over the beginning of the year, an increase of 663.6 billion yuan year-on-year. The total amount of loans increased steadily and rapidly. Structurally: (1) manufacturing and inclusive small and micro loans grew rapidly. At the end of March, the balance of medium and long-term loans in the manufacturing industry increased by 29.5% year-on-year, 18.1pct higher than the growth rate of various loans. The balance of Pratt Whitney small and micro loans increased by 24.6% year-on-year, 13.2pct higher than the growth rate of various loans. (2) The growth rate of the Yangtze River Delta is higher than that of the whole country, and the performance of the listed urban business industry in the region is expected. At the end of March, the growth rates of RMB loan balances in Shanghai, Jiangsu, Zhejiang and Anhui were 11.5%, 14.9%, 15.8% and 13.7% respectively. It is 0.1, 3.5, 4.4 and 2.3 PCT higher than that of the whole country respectively. In the first quarter, the credit supply in the Yangtze River Delta was strong, and the impact of the epidemic was relatively limited. It is expected that driven by the rapid growth of scale, rural commercial banks in urban areas in the region are expected to achieve better performance in the first quarter.
Investment suggestion: from the perspective of policy, considering the current economic pressure in China, it is expected that the steady growth policy is expected to continue to make efforts in real estate and infrastructure investment, driving the expected repair of the market. From a fundamental point of view, the industry performance is uncertain, and the potential adverse pressure is small. The accelerated transformation of financial management business will contribute to new profit growth points. From the perspective of capital, the proportion of institutional heavy positions held in the sector is at a historically low level, and there is little room for further reduction. The current sector is only 0.62 times the static Pb valuation, at an all-time low. We believe that the credit easing policy continues to work and the valuation repair market of the banking sector is worth looking forward to. It is recommended to select banks with customer base, sales channels and product service system first mover advantages in the field of wealth management ( China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) ), high-quality small and medium-sized banks with location advantages and market-oriented system mechanism ( Bank Of Ningbo Co.Ltd(002142) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , etc.).
Risk tip: the economy stalled and went down, and the real estate regulation policies and regulatory policies changed unexpectedly.
