\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Event: Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released the first quarter report of 2022, and the revenue growth rate was 19.34%; The growth rate of profit before provision was 23.89%, and the growth rate of net profit attributable to parent company was 23.38%. The performance was excellent,
Our comments are as follows:
1. In the first quarter of 2022, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) performance growth mainly depends on scale expansion, year-on-year widening of net interest margin, slowdown of cost expenditure and tax preference; The slowdown in the growth of non interest income and the increase in the provision made a negative contribution to profit growth.
\u3000\u30002. The net interest margin widened year-on-year, supporting the growth of net interest income, but narrowed month on month due to seasonal factors. In the first quarter of this year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) net interest margin was 3.09%, an increase of 12bp over the same period last year. On the basis of scale expansion, net interest income was driven to achieve a rapid growth of 24%; However, compared with the fourth quarter of last year, the net interest margin narrowed by 4bp, which is expected to be mainly affected by seasonal factors,
Specifically:
① on the asset side, the newly added assets in the first quarter were mainly invested in financial investment assets, which is consistent with the industry trend. It is expected that this year, the issuance of special bonds by local governments was ahead of schedule, and the superimposed market liquidity is relatively abundant, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) increased the allocation of bonds, the proportion of investment assets in total assets increased by 2.4 percentage points to 26.8% compared with the beginning of the year, and the proportion of loans decreased slightly.
In terms of the internal structure of loans, they are mainly invested in corporate credit, and the scale of new corporate credit is significantly better than that in the same period last year. The proportion of loans with an amount of 10 million yuan to 50 million yuan and more than 50 million yuan has increased compared with the end of last year; The provision of personal credit was basically the same as that in the same period last year, with a year-on-year increase in new personal operating loans. From the perspective of the main body of loan, the parent bank is the main driving force.
The first quarter is often not the peak season for Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) credit. In the first quarter of this year, under the policy background of steady growth and infrastructure development, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) used corporate credit to make up for the gap of retail credit and realized the rapid growth of interest bearing assets. In the second and third quarters, as small and micro business owners and individual industrial and commercial households began to carry out production and operation, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) personal business loans are expected to accelerate significantly. At that time, the growth of personal loans will be rapid and the investment of corporate loans will tend to be flat.
In terms of yield, according to the data disclosed by the people’s Bank of China and the China Banking and Insurance Regulatory Commission, the interest rates of new corporate loans and new inclusive small and micro loans in the first quarter decreased compared with the beginning of the year. It is expected that the interest rates of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) new loans are also under pressure. The superimposed new credit is mainly for the public, and the yield of interest bearing assets decreased slightly in the first quarter. Considering that after the second quarter, the release of high-yield retail credit, especially personal operating loans, is accelerated, and the subsequent interest bearing asset yield is expected to improve again.
② on the liability side, the growth rate of deposits at the end of the first quarter was higher than that at the beginning of the year. From the internal structure of deposits, the proportion of current funds showed a downward trend, and the proportion of time deposits and other types of deposits gradually increased. Considering the change of deposit structure and the impact of repricing high-cost deposits, it is expected that the cost rate of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) interest bearing liabilities in the first quarter will remain basically stable.
③ considering the slight decline of asset side yield and the stability of liability side cost, the Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) net interest margin decreased by 4bp month on month in the first quarter of this year, but this should be caused by seasonal factors. There will also be signs of decline in interest margin at the beginning of previous years. Looking forward to the whole year, the company will continue to favor high-yield small and micro loans and increase the proportion of credit guarantee loans. It is expected that the net interest margin will remain stable.
\u3000\u30003. The growth rate of medium income fell, which was a drag on revenue. Due to the influence of factors such as the recognition frequency of management fee income of financial management business, the net income of handling fees and commissions in the first quarter of this year decreased by 99.34% year-on-year, dragging down the growth of revenue. However, after the second quarter, with the gradual recognition of financial management business as income, the growth rate of medium income is expected to rebound significantly.
\u3000\u30004. The cost income ratio decreased year-on-year. In the first quarter of this year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) cost income ratio was 37.92%, down 2.3 percentage points year-on-year. It is expected to be mainly due to the reduction of offline marketing activities. Superimposed on the establishment of Inclusive Finance pilot zone in the first quarter of last year, a large amount of manpower expenditure was increased. These two factors drive the cost income ratio down year-on-year. Looking forward to the future, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) as an institution that continuously promotes the development of micro loan business, the human cost and business development expenditure are still large, and the cost income ratio is expected to remain at a high level.
\u3000\u30005. Excellent asset quality. At the end of the first quarter of this year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) non performing rate and provision coverage remained stable month on month, and the concern rate increased by 5bp compared with the beginning of the year, which is expected to be related to the disturbance of the epidemic situation. Generally speaking, the quality of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) assets remains at an excellent level in the industry and has strong ability to resist risks.
\u3000\u30006. Looking forward to the whole year of 2022, we expect that the rapid asset delivery speed and the year-on-year widening of the superimposed net interest margin will jointly support the rapid growth of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) revenue, and the excellent asset quality will drive the annual profit growth and maintain the excellent level of the industry. In addition, the company’s convertible bonds are currently being reviewed by the CSRC and are expected to be officially issued in the second half of the year. With a new round of capital replenishment in place, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) scale expansion space is expected to open; In the medium and long term, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) as a leader in the field of micro loan, and has certain growth space and prominent scarcity, it should enjoy the valuation premium.
Investment suggestion: we expect the company’s revenue growth rate to be 17.51% and net profit growth rate to be 25.78% in 2022. We give the investment rating of Buy-A, and the six-month target price is 8.99 yuan, equivalent to 1.25xpb in 2021.
Risk tip: the intensified competition of small and micro businesses leads to the narrowing of interest margin; Significant deterioration of asset quality;
