\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 128 Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) )
Event: on April 22, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released the first quarterly report of 2022, realizing revenue / profit before provision / net profit attributable to parent company of RMB 2.128 billion, 1.309 billion and 659 million, with a year-on-year increase of 19.3% / 24.1% / 23.4% respectively. ROA and weighted average roe were 13.05%, with a year-on-year increase of 1.36pct. Comments are as follows:
Driven by scale and net interest margin, revenue and net profit maintained rapid growth Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) 1q22 revenue, profit before provision and net profit increased by 19.3% / 24.1% / 23.4% respectively year-on-year, further improving compared with 21 years. The continuous recovery of profits is mainly due to: 1) the rapid expansion of credit scale. At the end of March, the loan balance increased by 6.3% over the beginning of the year and 24.1% year-on-year. 2) Under the new method of “small and scattered” asset allocation, the asset structure continued to be optimized and the high net interest margin was promoted. 1q22 net interest margin was 3.09%, up 3bp month on month; Increased by 12bp year-on-year.
The asset liability structure and customer structure were optimized to further improve the net interest margin month on month. Faced with the downward trend of loan pricing in the industry and the pressure of narrowing the net interest margin, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) actively adjusted the asset liability structure to deal with it. Asset side: on the one hand, optimize the asset structure, increase credit supply and accelerate the transformation of retail banks. At the end of March, the loan balance accounted for 59.2% of the total asset balance, with a year-on-year increase of 3.19 PCT; The balance of personal loans accounted for 57.41% of the total loan balance, with a year-on-year increase of 3.08pct. On the other hand, sink the customer base and promote the “small and scattered” focus of assets. In the face of fierce competition in the small and micro market, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) gradually sank to areas with relatively insufficient financial supply, and achieved higher loan pricing on the basis of strict risk control. In addition, since the second half of the year, the pressure on the granting of inclusive small and micro loans by big banks has eased, which has also helped to improve the pricing of Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) small and micro loans. Debt side: actively optimize the debt structure and rapidly increase the scale and proportion of deposits. In the fierce deposit competition environment in the first quarter, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) deposits still maintained rapid growth. In the first quarter, deposits increased by 21.5 billion, far exceeding that in the same period last year; At the end of March, the deposit balance increased by 15.4% year-on-year and 11.8% year-on-year. Deposits accounted for 85.5% of total liabilities, an increase of 1.42 PCT over the beginning of the year, and resident deposits accounted for 64.1%, an increase of 0.69 PCT over the beginning of the year. It is estimated that under the optimization of debt structure, the cost has been effectively controlled. Driven by both negative assets, 1q22 net interest margin increased 3bp to 3.09% month on month.
Recently, China’s economy is facing multiple pressures. The policy guides banks to support the real economy and reduce the comprehensive financing cost of enterprises through comprehensive + targeted RRR reduction, guiding small and medium-sized banks to reduce the upper limit of deposit interest rate, and encouraging high provision banks to reduce provisions. It is expected that the banking industry as a whole will face downward pressure on the return on assets and narrow the net interest margin. Under the strategy of “retail bank” transformation and “small and scattered”, we expect Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) net interest margin is expected to maintain a better level among peers and become one of the important supports for revenue growth.
The asset quality remains excellent, the provision is sufficient and the profit release can be expected. As of the end of March, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) NPL ratio was 0.81%, the same as that at the beginning of the year, and the asset quality remained excellent. From the perspective of forward-looking indicators, focus on the loan ratio of 0.94%, an increase of 5bp over the beginning of the year. The provision coverage rate at the end of March was 532.7%, up 0.9pct from the beginning of the year Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) excellent asset quality reflects its mature microenterprise model and excellent risk control ability. It is expected that the asset quality of the company will maintain a stable and positive trend. On this basis, the necessity of further improving the provision coverage is reduced; The credit cost is expected to decline in the future, which will contribute to the release of potential profits and the improvement of roe center.
Adhere to the characteristic and differentiated development path of small and micro enterprises, and open up growth space for remote replication Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) is positioned to serve agriculture, rural areas and farmers, small enterprises and small and micro enterprises, and has formed a mature small and micro model of “IPC technology + credit factory”. The front end uses IPC technology top note investigation and cross validation. The back-end adopts standardized and industrialized approval process and strict risk control to achieve a high income level Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) microenterprise model has strong professionalism, systematicness and replicability. In recent years, the company has replicated the small and micro model in remote branches and rural banks, and the effectiveness of remote strategy has gradually emerged; In 2021, the loan contribution and revenue contribution of non local markets have increased to 69% and 70%. The four newly established inclusive finance pilot zones last year are expected to bring more incremental demand.
Investment suggestions: Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) adhere to the development path of small and micro enterprises with characteristics and differentiation, and deeply cultivate the local market; At the same time, by expanding business space through remote branches and rural banks, the credit scale is expected to maintain rapid growth. Small and micro businesses have distinctive characteristics and mature models. At the same time, they sink the customer base, become small and scattered, have strong loan bargaining power, and the net interest margin is in a leading position among comparable rural commercial banks. The asset quality remains excellent, the provision is sufficient, and the counter replenishment profit space is large. It is estimated that the growth rate of net profit from 2022 to 2024 will be 22.6%, 20.3% and 19.1%. The corresponding BVPs are 8.21, 9.40 and 10.81 yuan / share respectively. Considering the valuation center and fundamentals of the company in recent two years, the company is given 1.2 times of the 2022 Pb target valuation, corresponding to the target price of 9.85 yuan / share, maintaining the “strongly recommended” rating.
Risk tip: the economic stall and downturn lead to the deterioration of asset quality; Unexpected changes in regulatory policies, etc.
