At the beginning of 2022, many banks published their 2021 transcripts. Under the background of good performance expectations, the stock price showed a continuous upward trend. On January 11, among the 41 A-share listed banks, 31 banks’ share prices kept rising, and the overall increase of the sector was 1.14%. In the view of analysts, thanks to the improvement of bank profits and asset quality, the undervaluation of the banking sector and the attraction of high dividend yield, the banking sector as a whole will remain optimistic for some time to come.
bank stocks rose
In the morning trading on January 11, A-share banking stocks were popular as a whole. 37 of the 41 banks showed a growth trend, with Bank Of Chengdu Co.Ltd(601838) and Industrial Bank Co.Ltd(601166) leading the rise exceeding 3.8%. The reporter of Beijing business daily noted that up to the close of the day, although the overall share price of the banking sector had a correction, the share price of 31 banks remained rising, with an overall increase of 1.14%. Among them, Bank Of Chengdu Co.Ltd(601838) , Industrial Bank Co.Ltd(601166) still ranked the top two, with an increase of 5.09% and 3.73% respectively.
Turning to the reasons for the recent rise of the banking sector as a whole, China Everbright Bank Company Limited Co.Ltd(601818) financial market analyst Zhou Maohua believes that the individual stocks of the sector that accumulated a large increase last year have been callback one after another, and some hedge funds have flowed into defensive sectors such as banks. From the perspective of Fundamentals and valuation, the banking sector has both attack and defense as a whole. Combined with the current trend, the overall banking sector will be optimistic in the future, mainly due to the improvement of bank profits and asset quality, the undervaluation of the banking sector and the attraction of high dividend yield.
According to the statistics of the reporter of Beijing business daily, in the six trading days since the beginning of the year, A-share bank shares have increased by 4.37%, and the trend of plate recovery is obvious.
Tao Jin, deputy director of the macroeconomic research center of Suning Financial Research Institute, said that the recent continuous rise of the banking sector, on the one hand, reflects the pre increase in the performance of the banking sector. Under the stock market style of “performance is king”, the price of bank shares has been realized; On the other hand, it also reflects investors\’ expectation that bank profits will continue to rise steadily in the future, which corresponds to the undervalued level of bank stocks. Under the expectation of performance improvement, it is easier to form a “double-click” of performance and valuation improvement.
For the follow-up stock price trend, Tao Jin predicted that in the future, the growth of bank profits will be the main driving factor of its stock price. At least under the guidance of stable growth and wide credit policy in the first half of the year, there is still a large growth space for the bank’s credit business in the fields of manufacturing, industrial green transformation, housing mortgage loans and infrastructure investment, which is expected to support the center of the bank’s stock price.
multiple profit acceleration
The general rise of bank stocks is related to the “good news” of many banks in 2021. On January 11, Bank Of Jiangsu Co.Ltd(600919) and Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) released the annual performance express of 2021 one after another to predict the annual performance in advance. According to the disclosed data, Bank Of Jiangsu Co.Ltd(600919) in 2021, the net profit attributable to the shareholders of the parent company was 19.694 billion yuan, with a year-on-year increase of 30.72%, the highest increase in recent ten years; Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) the net profit attributable to shareholders was 2.184 billion yuan, a year-on-year increase of 21.13%, a new high in recent three years.
Prior to this, the “forecast” of 2021 annual performance has been disclosed in Industrial Bank Co.Ltd(601166) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) , Bank Of Chengdu Co.Ltd(601838) . Among them, Industrial Bank Co.Ltd(601166) realized a net profit attributable to the shareholders of the parent company of 82.68 billion yuan, a year-on-year increase of 24.1%, a nine-year high; Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) the net profit attributable to shareholders was 1.148 billion yuan, a year-on-year increase of 20.72%, the highest increase in recent ten years.
Bank Of Chengdu Co.Ltd(601838) issued a performance pre increase announcement on January 4, becoming the first bank to disclose performance forecast in 2022. According to the bank’s preliminary calculation, the net profit attributable to shareholders in the whole year is expected to increase by RMB 1.085 billion-1.507 billion, a year-on-year increase of 18% – 25%, and the performance growth rate is expected to reach a new high.
As for the main reasons for the pre increase of performance, Bank Of Chengdu Co.Ltd(601838) said that first, the asset scale increased steadily, the customer deposit funds formed a strong guarantee in supporting the scale growth, and the asset liability structure remained stable; Second, the credit business expanded well, and the proportion of total loans in assets further increased; Third, cost control measures are effective, and the cost income ratio is maintained at a low level.
In addition, from the perspective of asset quality, according to the disclosed data, the non-performing rate of many banks decreased steadily, and the provision coverage increased significantly. For example, by the end of 2021, Industrial Bank Co.Ltd(601166) NPL ratio was 1.1%, down 0.15 percentage points from the end of the previous year; The provision coverage increased by 49.9 percentage points over the end of the previous year, reaching 268.73%. Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) asset quality was further optimized. By the end of 2021, the bank’s non-performing loan ratio was 1%, down 0.28 percentage points from the beginning of the year; The provision coverage rate reached 411.1%, an increase of 105.79 percentage points over the beginning of the year.
In Tao Jin’s view, the primary reason for the net profit growth of many banks to reach a new high in recent years is that the growth rate of the real economy is significantly higher than that in the previous two years. It is expected that the actual growth rate of GDP in 2021 will exceed 8%, which is reflected in the recovery of the return on investment of the entity. Secondly, the repayment ability of bank customers is also improving, the increase rate of non-performing loan balance is slowing down, and the non-performing rate is also declining steadily. In addition, the structural expansion of bank credit in 2021 led to rapid business growth in manufacturing, small and micro enterprises, green finance and other fields. On the whole, the net interest margin of banks is also stabilizing. With the expansion of credit, the proportion of non interest income is also decreasing.
overall performance is expected to be strong
According to the current trend and combined with the data of the third quarter of 2021, what will be the annual performance of A-share listed banks in 2022?
According to Tao Jin’s analysis, from the third quarterly report of 2021, the overall net profit of listed banks increased by 14.6% year-on-year, the fastest increase in recent three years and the only one exceeding 10% in a year. Combined with the published forecast that the growth rate of Bank net profit is generally higher than 20%, the overall net profit growth rate of banks that have not published the express may be relatively low, but it is expected to be generally higher than that in recent years.
Zhou Maohua also said that China has timely controlled the spread of the epidemic, provided accurate policy support, gradually restored production and life, warmed up business operations, and continuously improved bank profits and asset quality. At the same time, the low base effect in 2020. From the perspective of China’s sustained economic recovery and the low base in 2020, the operating performance of listed banks is expected to be strong in 2021.
