\u3000\u3000 Bank Of Jiangsu Co.Ltd(600919) (600919)
In 2021, the net profit attributable to the parent company increased by 30.72% year-on-year, reaching a ten-year high
The company released the performance express for 2021. The annual revenue and net profit attributable to the parent company were 63.771 billion yuan and 19.694 billion yuan respectively, with a year-on-year increase of 22.58% and 30.72%. The year-on-year growth rate decreased by 2.12 PCT and increased by 0.21 PCT compared with the first three quarters. The annual weighted average roe reached 12.60%, with a year-on-year increase of 0.69pct. The company’s performance continued its high growth trend, demonstrated strong profitability, and the growth rate of net profit attributable to the parent company hit a ten-year high.
The company’s performance effectively withstood the impact of the epidemic. In terms of two-year compound year-on-year growth, the revenue and parent net profit were 19.08% and 16.07% respectively, up 0.39pct and 1.46pct respectively compared with the first three quarters.
Credit expansion was still faster than total assets, and the year-on-year growth rate of deposits increased
At the end of 21q4, the total assets of the company increased by 12% year-on-year, with a year-on-year growth rate of 1.99pct lower than that at the end of Q3; The loan balance increased by 16.52% year-on-year, with a year-on-year growth rate of 4.10pct lower than that at the end of Q3, and the expansion rate of credit supply is still higher than that of total assets. For a longer time, the loan balance at the end of 21q4 increased by 16% compared with the two years at the end of 19q4, slightly lower than 16.72% at the end of 21q3, and the credit supply maintained a stable growth. At the end of 21q4, the company’s deposit balance increased by 11.10% year-on-year, with a year-on-year growth rate of 1.89pct higher than that at the end of Q3. The increase in deposit growth has effectively supported credit lending.
According to our calculation, the company’s annual net interest margin remained stable compared with the first three quarters. With the corporate credit structure inclined to retail, the interest rate spread is expected to maintain a certain toughness.
Asset quality continues to be compacted
At the end of 21q4, the company’s non-performing rate fell 4bp to 1.08% month on month, a new low in eight years, continuing the downward trend of non-performing rate since listing. While the historical burden is gradually cleared away, the asset structure is optimized and the asset quality is compacted. At the end of 21q4, the company’s provision coverage increased by 12.19pct to 307.72% month on month, a record high. The steady increase in the provision thickness further strengthened the company’s risk offset ability.
Convertible bonds are in the period of equity conversion, which is a powerful supplement to the core capital level
The high growth of credit supply has consumed the core Tier-1 capital. At the end of 21q3, the company’s core Tier-1 capital adequacy ratio was 8.75%, which is in the backward position of listed banks. However, the company still has nearly 20 billion yuan of convertible bonds in the stock conversion period. According to the static calculation of the weighted net risk assets at the end of 21q3, the core tier 1 capital adequacy ratio can be increased by 1.15 PCT; In addition, higher profit growth also helps to supplement endogenous capital.
Investment suggestion: consolidate the public, speed up retail and maintain the “buy” rating
The company is based in Jiangsu and radiates the Yangtze River Delta, with obvious regional advantages. As the only provincial local legal person bank in Jiangsu Province, it can fully enjoy the industrial dividend dominated by Jiangsu manufacturing industry. At the same time, the company relies on the rich Yangtze River Delta to accelerate the development of wealth management business and boost retail transformation. By the end of 21h1, AUM of the company’s retail customers had reached 872.3 billion yuan, ranking first among urban commercial banks. We are optimistic that while the company continues to consolidate its traditional corporate advantages, it will promote retail transformation and bring medium income business growth. We expect that the growth rate of net profit attributable to parent company from 2022 to 2023 will be 19.96% and 18.74%, giving the target Pb of 0.85x in 2022, corresponding to the target price of 9.66 yuan, maintaining the “buy” rating.
Risk warning: weak macro economy, insufficient credit demand and fluctuation of credit risk; The express is the preliminary accounting data, and the final disclosure is the annual report
