Recently, the performance of several listed banks in 2021 has become the focus of the market. As of January 12, five banks have disclosed their performance letters for 2021. The net profits of these companies all increased year-on-year last year. The net profits of Bank Of Jiangsu Co.Ltd(600919) , Industrial Bank Co.Ltd(601166) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) and other four banks increased by more than 20% year-on-year last year.
Boosted by this, the banking sector has performed strongly since the new year, with an overall rise of 4.19%, outperforming the Shanghai Composite Index (a cumulative decline of 1.16%) and ranking second in the Shenwan industry. Specifically, the share prices of all 41 bank stocks rose during the period, Bank Of Chengdu Co.Ltd(601838) , Bank Of Jiangsu Co.Ltd(600919) , Industrial Bank Co.Ltd(601166) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) and other four stocks increased by more than 10% during the period.
In this regard, institutions generally believe that the opening market of the banking sector is related to three factors: first, the suppression and weakening of real estate risk exposure, and the policy force of “steady growth” brings further loose expectations; Second, the market style is switched, and the funds flow from the high valuation sector to the low valuation sector; Third, the performance express of some banks disclosed that the net profit increased greatly and the bad performance decreased, which became the catalyst of the plate market.
three factors supported the performance of bank stocks exceeding expectations
Among the five banks that have disclosed the performance express of 2021, Bank Of Jiangsu Co.Ltd(600919) achieved a net profit of 19.694 billion yuan last year, with a year-on-year increase of 30.72%, setting the highest growth record of the bank in recent ten years, and the growth of net profit led the listed banks. According to the company’s performance express, by the end of 2021, the bank’s total assets had reached 2.62 trillion yuan, an increase of 12% over the beginning of the year; Last year, the operating revenue was 63.771 billion yuan, a year-on-year increase of 22.58%; The realized earnings per share was 1.21% and the weighted return on net assets was 12.6%. At the same time, Bank Of Jiangsu Co.Ltd(600919) NPL ratio and NPL balance have both decreased, and asset quality has entered a new stage of optimized development. At the end of 2021, the non-performing loan ratio of the bank was 1.08%, a decrease of 0.24 percentage points compared with the end of the previous year, and has decreased year by year in the six years since its listing; The provision coverage rate was 307.72%, an increase of 51.32 percentage points over the end of the previous year, and has increased year by year in the six years since listing.
According to the 2021 performance express disclosed on January 10, the bank achieved a net profit of 82.68 billion yuan last year, a year-on-year increase of 24.1%, a nine-year high. Asset quality continued to improve. By the end of 2021, the company’s non-performing loan balance was 48.714 billion yuan, a decrease of 942 million yuan compared with the end of 2020; The non-performing loan ratio was 1.10%, down 0.15 percentage points from the end of 2020; The provision coverage rate was 268.73%, an increase of 49.90 percentage points over the end of the previous year.
According to the 2021 performance express released by Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) , the bank achieved a net profit of 1.15 billion yuan last year, a year-on-year increase of 20.7%, the highest increase in a decade; Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) has achieved a “double drop” in non-performing loans for three consecutive quarters. At the end of last year, the non-performing loan ratio fell sharply to 1%, and the provision coverage increased for six consecutive quarters to 411%, ranking the leading level of listed banks. Prior to this, Bank Of Chengdu Co.Ltd(601838) has issued a performance pre increase announcement on January 4. It is preliminarily expected that the net profit attributable to shareholders will increase by 18% to 25% year-on-year, which is also expected to reach the highest performance growth rate in recent years.
As for the bank’s performance exceeding expectations in 2021, Xia Fengguang, a private placement fund manager interviewed by the reporter of Securities Daily, said, “There are three main reasons for the better performance growth of banks that have disclosed the performance express in 2021: firstly, the bank credit structure is actively inclined to retail, and the interest margin remains stable; secondly, due to the impact of the epidemic in 2020, the bank profit declined, and the profit recovered in 2021; finally, the momentum of economic recovery in the first half of last year is relatively good. Therefore, the net profit of the banking industry in 2021 Profit exceeding expectations is the main reason for pushing bank stocks out of excess returns in the near future. “
“Last year, the overall growth of the banking sector was low, and the current valuation of the sector was low. The overall performance growth of the banking industry was high in 2021. With the disclosure of the performance data of the bank’s annual report, it will drive the overall upward trend of the sector.” Chen Li, chief economist of Chuancai securities and director of the Research Institute, told reporters. Chen Li believes that the bank performance is expected to continue the growth trend in 2022: first, under the monetary policy of “stabilizing the economy” and “broadening credit”, the bank credit scale will grow steadily; Second, real estate related loans, as an important part of bank credit, will continue to improve the profitability of bank related businesses with the relaxation of real estate financing; Third, driven by policy support, industrial expansion and upgrading, credit businesses such as green finance, advanced manufacturing and Pratt & Whitney small and micro enterprises will continue to expand, contributing to the further growth of bank performance.
plate “turn the tide around”?
Further combing, it is found that up to now, the latest dynamic P / E ratio of the banking sector is 5.18 times and the latest P / B ratio is 0.54 times. The valuation of this sector is at a historical low and has significant valuation advantages. Among them, among the 41 bank stocks, 33 bank stocks are in a “net breaking” state, accounting for more than 80%.
China International Capital Corporation Limited(601995) said it was optimistic about the performance of bank stocks in 2022. Since 2018, the compression of industry valuation is expected to be repaired. After high-quality banks experience “poverty makes them think of change”, the potential of wealth management and science and technology empowerment is released, ushering in “the good times come”. China International Capital Corporation Limited(601995) believes that there is limited space and range for continued valuation adjustment, and the overly pessimistic market expectations reflected by valuation and positions are expected to be corrected.
Guosen Securities Co.Ltd(002736) it is expected that the industry fundamentals will remain stable in 2022. At present, the valuation of the sector is at a historical low, maintaining the industry’s “over allocation” rating. In terms of individual stocks, focus on small and medium-sized banks that have advantages in serving manufacturing enterprises.
In the current structural market, northward funds began to transfer undervalued bank stocks for layout. Statistics show that up to now, 37 bank shares have obtained northbound capital positions, with a total number of 16.631 billion shares, an increase of 1.015 billion shares or 6.50% compared with 15.616 billion shares at the end of last year. Among them, 21 bank shares were significantly increased by northbound funds, and the increased number of northbound funds exceeded 10 million shares. 9 individual shares such as Agricultural Bank Of China Limited(601288) , Industrial And Commercial Bank Of China Limited(601398) , China Construction Bank Corporation(601939) , Bank Of China Limited(601988) , Bank Of Communications Co.Ltd(601328) , Postal Savings Bank Of China Co.Ltd(601658) , Ping An Bank Co.Ltd(000001) , Bank Of Jiangsu Co.Ltd(600919) , China Everbright Bank Company Limited Co.Ltd(601818) were increased by northbound funds of more than 50 million shares during the period, and the future performance is worthy of attention.
Shen Juan, chief analyst of Huatai Securities Co.Ltd(601688) industry, said she was optimistic about the plate repair market driven by three factors. In terms of performance, it is expected that the fundamentals of listed banks are expected to continue to improve in 2021, with a year-on-year profit growth rate of 12.9%. With the disclosure of some bank performance letters, it is expected to catalyze the market of the sector. In terms of policy, the tone is “stable”, the monetary policy is more proactive and promising, and the total amount + structural tools work together. It is expected to further reduce interest rates and reserve requirements in the first quarter of 2022, superimpose the pre issuance of special bonds, and protect the bank’s business environment. In terms of funds, since mid December 2021, funds have shifted from high valuation sector to low valuation sector, and the market style has changed.
Xia Fengguang said, “Since the new year, funds have gradually shifted to the undervalued sector represented by big finance. It is expected that the profitability of banks will not increase continuously this year and may return to single digit growth. However, banks with better location advantages, strong retail transformation and strong asset management business advantages are still expected to maintain a growth rate higher than expected, which is the key choice in bank stock allocation 。”
Table : list of bank stocks favored by northbound funds since the new year
