Core view
Highlights Review & focus next week – important news last week: 1) on April 15, the central bank implemented a “comprehensive + targeted” RRR reduction, which implemented the requirements of “timely use of RRR reduction and other monetary policy tools to promote banks to enhance their credit lending capacity” put forward by Premier Li Keqiang at the national standing committee meeting on April 13. Generally speaking, although the range of the RRR reduction is lower than the market expectation, we believe that the significance of the steady growth signal transmitted by the RRR reduction is more noteworthy and conducive to stabilizing the market expectation. 2) According to the financial statistics released by the central bank in March, RMB loans increased by 3.13 trillion in March, and the market expectation was 2.64 trillion. The total amount of credit exceeded expectations. In terms of structure, medium and long-term loans of enterprises increased by 14.8 billion year-on-year (compared with 594.8 billion year-on-year in February), indicating that the margin of credit demand has been repaired. 3) The national Standing Committee stated that it encourages large banks with high provision level to reduce the provision rate in an orderly manner. We believe that the main purpose of the policy is to encourage banks to improve non-performing tolerance, increase loan support for small, medium-sized and micro enterprises, protect the profitability of banks and provide guarantee for profit transfer. Announcement of important companies: Bank Of Nanjing Co.Ltd(601009) release 1 quarterly report; Hangzhou and Jiangsu released their annual reports for 2021. Focus next week: the first quarter economic data will be released on Monday, the central bank will release the LPR quotation on Wednesday, the first quarterly report will be released on Thursday Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) and the first quarterly report will be released by China Merchants Bank on Friday.
Last week, the banking sector first depressed and then rose, and the overall index fell slightly. (1) In the last week, the Shenwan bank index fell by 0.21%, while the CSI 300 index fell by 0.99% in the same period. The banking sector outperformed the CSI 300 index by 78bps, ranking 10th among 31 Shenwan level industries; (2) Among the sub sectors, the index of state-owned large banks fell by 0.80%, the index of joint-stock banks fell by 0.08%, and the indexes of urban commercial banks and rural commercial banks both fell by 0.35%; (3) In terms of individual stocks, the top gainers are Bank Of Chengdu Co.Ltd(601838) (5.89%), Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) (3.91%) and Bank Of Nanjing Co.Ltd(601009) (2.85%), and the top losers are Bank of Lanzhou (- 8.70%), Qilu Bank Co.Ltd(601665) (- 4.45%) and Bank Of Ningbo Co.Ltd(002142) (- 3.43%). Bank stock valuations remain low. At the end of last week, the overall Pb of the sector was 0.63 times, and that of the 300 constituent stocks of Shanghai and Shenzhen was 1.46 times. From the perspective of the deviation degree of the long-term trend, the valuation deviation degree of the banking sector relative to the 300 constituent stocks of Shanghai and Shenzhen was at the 13% historical position in the past 13 years, and the sector was still deeply undervalued.
Last week, the capital was loose, and the interest rate of short-term funds fluctuated downward. The inter-bank market dr007 decreased by 21ps to 1.73%, and the overnight Shibor interest rate decreased by 41bps to 1.34%. Last week, the central bank renewed MLF in equal amount, and the open market realized a total of 50 billion yuan of net withdrawal funds. Last week, a total of 260 billion yuan of funds expired in the open market, and a total of 60 billion yuan of reverse repurchase and 150 billion yuan of MLF were issued; A total of 60 billion yuan of reverse repo will expire next week. In terms of exchange rate, the US dollar against RMB (CFETS) closed at 6.3711 last weekend, up 67 points from the previous weekend; The US dollar closed at 6.3817 against the offshore RMB, up 131 points from the previous weekend; The FOB / RMB spread fell 64 points to – 106 points.
Investment proposal and investment object
Previously, we have always stressed that even in the face of the disturbance of the epidemic and the downward pressure of the economy, with the steady growth policy continuing to support the economy, the fundamentals of banks are still expected to remain stable. This week Bank Of Nanjing Co.Ltd(601009) as the first listed bank in China to disclose the first quarterly report of 22 years, its asset quality remained stable and its performance growth increased steadily, which has a certain guiding significance for the industry. We judge that the overall net profit growth of the industry in the first quarter can continue to perform well. At present, the overall valuation level of bank stocks is still at a historical low. As of April 15, the static Pb valuation of the sector was only 0.63x. Looking forward to the second quarter, we are still optimistic about the repair opportunities of the sector valuation brought by the “correction” of overly pessimistic market expectations, and continue to maintain the “optimistic” rating of the industry.
In terms of individual stocks, it is suggested to pay attention to: 1) value targets with excellent historical profitability and leading asset quality represented by China Merchants Bank Co.Ltd(600036) ( China Merchants Bank Co.Ltd(600036) , Unrated) and Bank Of Ningbo Co.Ltd(002142) ( Bank Of Ningbo Co.Ltd(002142) , Unrated); 2) Undervalued targets represented by Bank Of Communications Co.Ltd(601328) ( Bank Of Communications Co.Ltd(601328) , Unrated), Postal Savings Bank Of China Co.Ltd(601658) ( Postal Savings Bank Of China Co.Ltd(601658) , buy), Industrial Bank Co.Ltd(601166) ( Industrial Bank Co.Ltd(601166) , Unrated); 3) Urban rural commercial banks with strong regional economic advantages represented by Shanghai Rural Commercial Bank Co.Ltd(601825) ( Shanghai Rural Commercial Bank Co.Ltd(601825) , not rated), Bank Of Chengdu Co.Ltd(601838) ( Bank Of Chengdu Co.Ltd(601838) , not rated), Bank Of Nanjing Co.Ltd(601009) ( Bank Of Nanjing Co.Ltd(601009) , not rated).
Risk tips
The economic downturn exceeded expectations; The liquidity risk of real estate enterprises continues to spread; The strength of financial supervision increased more than expected; Changes in assumptions affect the calculation results.
