After nearly three years, there has been a net profit growth rate of more than 30% in listed banks again.
According to the performance express released on January 11, the net profit attributable to the parent bank in 2021 was 19.694 billion yuan, a year-on-year increase of 30.72%.
Recently, the performance express released by many banks also shows that the rapid growth of net profit is not an example. In addition to Bank Of Jiangsu Co.Ltd(600919) , Industrial Bank Co.Ltd(601166) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) net profit attributable to the parent company increased by more than 20% year-on-year, and China Citic Bank Corporation Limited(601998) also reached 13.6%.
According to the statistics of the financial Associated Press, the recent case of Bank net profit growth exceeding 30% occurred in 2017, and the growth rate of parent net profit in Bank Of Chengdu Co.Ltd(601838) year reached 51.64%. The last time the growth rate of bank performance generally exceeded 20% or more occurred about 9 years ago.
Funds also smell the rising opportunities brought by the sharp increase in bank profits. Data show that the banking sector has been rising continuously recently. On the 11th, the banking sector continued to rise as a whole. Among the 40 listed banks, 31 banks’ share prices closed up, of which Bank Of Chengdu Co.Ltd(601838) rose the highest, at 5.09%; The Industrial Bank Co.Ltd(601166) and Bank Of Jiangsu Co.Ltd(600919) of the published performance letters increased by more than 3%. Some brokerage analysts believe that the banking sector is expected to maintain a strong performance in the future.
Insiders pointed out that due to the improvement of the epidemic situation, the good recovery of China’s economic growth last year and the low base of the previous year, the bank’s performance will generally show a high-speed growth in 2021. However, due to different regions and business priorities, banks will also have profit differentiation. Recently, the policies of “maintaining growth” have been issued one after another, which may continue to support the rise of banking profits in 2022. However, the banking industry is expected to return to single digit steady growth.
what is the reason for the great increase in bank performance in 2021?
At present, the net profit attributable to the parent of the five listed banks that have disclosed the performance express has reached double-digit year-on-year growth. Industry insiders predict that there will be no few banks that will achieve a profit growth rate of more than 20% in 2021. This situation is indeed quite rare in the development of the banking industry in recent years.
According to the statistics of the financial Associated Press, the high-speed growth era of banks in the last round was mainly concentrated from 2010 to 2012. In 2010, the net profit attributable to the parent company of Bank Of Jiangsu Co.Ltd(600919) increased by 59.67% year-on-year, and then decreased to 39.38% in 2011; Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) the growth rate of parent net profit of more than 40% also appeared in 2010 and 2011, and the highest growth rate of net profit did not exceed 14% in the following years. The parent net profit of Industrial Bank Co.Ltd(601166) has maintained an increase of more than 30% for three consecutive years since 2010, but the growth rate has not reached 20% since then. China Citic Bank Corporation Limited(601998) since the year-on-year growth rate of net profit attributable to the parent company reached 26.55% in 2013, the growth rate has been in single digits. The single digit growth is also the state of large banks and most joint-stock banks for a long time.
Many bank analysts attributed the rapid growth of bank performance in 2021 to the improvement of the epidemic and the relatively low year-on-year base. At the same time, it is emphasized that the performance of listed banks should be viewed objectively.
Zeng Gang, deputy director of the national finance and development laboratory, said that the overall profitability of the banking industry may maintain rapid growth in 2021. Last year, the epidemic was effectively controlled, which led to the recovery of China’s economy. It is expected that there may be a growth rate of more than 8%, which laid a foundation for the improvement of the operating performance of listed banks. In 2020, affected by the epidemic, the net profit of banks was generally low, so the base was low, which also pushed up the growth rate of the banking industry in 2021.
The data show that among the five banks, the highest growth rate of net profit attributable to the parent in 2020 is Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) , with a year-on-year growth rate of 4.79%; The lowest is Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , only 1.01%.
“Although the overall performance of the banking industry is good in 2021, banks will also be divided.” Zong Liang, chief researcher of Bank Of China Limited(601988) Research Institute, told the financial associated press that China’s foreign trade situation was good in 2021, which led to the growth of the performance of banks in some eastern coastal areas. However, if the business focuses on the industries and regions greatly affected by the epidemic, the performance growth of relevant banks may not be as fast as the five banks that have disclosed the performance express.
Everbright Securities Company Limited(601788) Wang Yifeng, chief analyst of the financial industry, also believes that high-quality listed banks in Jiangsu and Zhejiang benefit from the improvement of the regional economic environment. In the future, while credit supply continues to “increase in volume and stabilize in price”, they are expected to maintain high-quality asset quality. The head banks with high fundamentals will also benefit from the dual factors of strong interest margin toughness and continuous development of wealth management. Net interest income and non interest income are expected to continue to outperform their peers.
In addition, Dong ximiao, chief researcher of Zhaolian finance, believes that the asset quality of listed banks tends to be stable and the non-performing loan ratio has decreased, which has also pushed up the growth of bank profits. The data show that the non-performing loan ratio of the five banks that have disclosed the performance express fell last year. Among them, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) has the lowest non-performing rate, which has decreased to 0.81% by the end of 2021; China Citic Bank Corporation Limited(601998) decreased the most. By the end of 2021, the non-performing rate of the bank decreased by 0.25 percentage points to 1.39%. The defect rates of Industrial Bank Co.Ltd(601166) , Bank Of Jiangsu Co.Ltd(600919) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) are also about 1%.
bank performance in 2022 may return to single digit growth
Many insiders believe that the double-digit performance growth of banks may not be sustainable. Although the profitability of banks will not be too poor in 2022, they will maintain a relatively stable growth rate, and the growth of Bank net profit may return to single digit growth.
BOC research previously reported that in 2022, as the covid-19 epidemic was further controlled, the macroeconomic situation was stable and good, and the monetary policy returned to normalization, superimposed with factors such as stricter supervision in the fields of local government implicit debt and real estate industry, and the low base effect of asset liability scale during the epidemic period, The scale of assets and liabilities of commercial banks will maintain a growth trend, but the growth rate will be slightly slower than that in 2021. The scale of assets and liabilities will maintain a year-on-year growth rate of about 8%, and the year-on-year growth rate of net profit is close to 6%.
Dai Zhifeng, director of Zhongtai Securities Co.Ltd(600918) Research Institute, believes that the current bank loan side structure continues to contribute to the comprehensive interest rate positively, the credit pricing of the industry asset side has been at a low level, and the space for the industry credit interest rate to decline is limited. With the gradual promotion of stable credit in the industry, it is expected that the proportion of credit will continue to increase, contributing to the return on assets to a certain extent. At the same time, the pressure on deposit pricing is slowing down. At present, the deposit interest rate has changed significantly, the short and medium-term deposit interest rate is basically stable, and the long-term deposit interest rate has decreased significantly.
Zong Liang pointed out that this year, the amount of bank loans will continue to increase, focusing on industries currently supported by the state, such as green industries and high and new technologies. At the same time, there has been “marginal easing” in real estate loans. Therefore, some banks with low bank loan concentration will also obtain certain benefits.
Banks will continue to make efforts in wealth management, which will also become the driving force driving the growth of bank performance in 2022.
In addition, in terms of bank asset quality, the market generally believes that although it is generally stable, it is still worthy of attention.
Wang Yifeng believes that the non-performing rate of the banking industry will be generally stable in 2022. Under the background of the recovery of the real estate financing environment, the potential non-performing pressure of real estate assets on the bank’s balance sheet is expected to be mitigated, but the off balance sheet risk is still large.
Dong ximiao said that the current decline in the non-performing rate of the banking industry is due to banks generally increasing the disposal of non-performing assets. At the same time, the extension of phased policies such as deferred repayment of principal and interest has not exposed some non-performing assets for the time being. To this end, he reminded that banks should also take multiple measures to prevent and resolve all kinds of risks, broaden the disposal channels of non-performing assets, and curb the downward trend of asset quality of listed banks, especially small and medium-sized banks.
However, BOC research believes that the real economy will continue to improve in 2022, and the repayment willingness and ability of corporate and individual customers will be improved. With the regulatory authorities’ recognition of asset quality becoming more and more clear, the proportion of potential risks is becoming lower and lower. The risk resistance of banks is also increasing. It is estimated that the non-performing rate of commercial banks may remain around 1.75% in 2022, which is still under control.
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