\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 926 Bank Of Hangzhou Co.Ltd(600926) )
Event:
On April 25, Bank Of Hangzhou Co.Ltd(600926) released the first quarterly report of 2022, realizing an operating revenue of 8.768 billion yuan, yoy + 15.7%, and a net profit attributable to the parent company of 3.308 billion yuan, yoy + 31.4%.
Comments:
1. The revenue maintained a good growth rate, and the profit growth rate exceeded 31%
Bank Of Hangzhou Co.Ltd(600926) in the first quarter, the growth rates of operating income, net profit before provision and net profit attributable to parent company were 15.7%, 13.9% and 31.4% respectively, with changes of – 2.6, – 3.3 and 1.6pct respectively compared with 2021. The growth rate of revenue has remained at a good level, and the cumulative growth rate of profit has increased quarter by quarter since 2020. In terms of the year-on-year growth rate of fine split profit, scale expansion and non interest income are the main contribution sub items, the negative drag of net interest margin has increased compared with 2021, and the negative contribution of operating expenses and provisions has narrowed.
2. The asset side maintained a rapid expansion rate, and the net interest income driven by “volume plus price” increased positively year-on-year
In the first quarter of 2022, Bank Of Hangzhou Co.Ltd(600926) net interest income increased by 1.4% year-on-year to 5.459 billion yuan. The asset side maintained a high expansion rate of more than 18%, and the estimated net interest margin decreased by 11bp quarter on quarter. The company mainly drives the positive year-on-year growth of net interest income through “compensating price by volume”. Specifically:
The asset side maintained a rapid expansion speed, and the credit supply achieved a “good start”. At the end of the first quarter of 2022, Bank Of Hangzhou Co.Ltd(600926) interest bearing assets and loans increased by 18.6% and 21.4% year-on-year respectively. Under the condition of high base in 2021, the growth rate decreased by only 0.9 and 0.3pct compared with the end of the previous year. 1q added 41.847 billion yuan of loans in a single quarter, an increase of 6.011 billion yuan year-on-year. By the end of the year, the credit assets had increased by 43.0t, accounting for 1.3% of the previous year’s total assets. Benefiting from the strong economic vitality of the region, the strong capital demand of enterprises and residents, the credit supply maintained a strong growth momentum and achieved a “good start”.
In terms of loan structure, corporate loans and personal loans increased by 36.039 billion yuan and 5.808 billion yuan respectively compared with the end of the previous year. The incremental ratio of corporate and retail loans was roughly 6:1, and the proportion of personal loans decreased by 1.6pct to 36.5% compared with the end of the previous year. The proportion of deposits increased and the debt structure was further optimized. At the end of the first quarter of 2022, the company’s interest bearing liabilities and deposits increased by 19.5% and 18.2% respectively year-on-year, and the growth rate changed by – 0.9 and 2.1pct respectively compared with the end of the previous year. 1q deposits increased by 58.419 billion yuan compared with the end of the previous year, and the proportion of deposits increased by 1.5pct to 65.0% compared with the end of the previous year. On the whole, the deposit structure was generally stable. The proportion of demand deposits decreased by 0.9pct to 52.7% quarter on quarter, and the proportion of personal deposits increased by 0.3pct to 17.0% quarter on quarter.
The decline of asset side yield dragged down the performance of net interest margin. It is estimated that the net interest margin of the company in the first quarter decreased by 11bp to 1.53% compared with the previous year, of which the rate of return on interest bearing assets decreased by 11bp to 3.70% and the cost rate of interest bearing liabilities decreased by 1bp to 2.37% compared with the previous year. The decline of asset side yield dragged down the performance of interest rate spread, but this is also the pressure point faced by the whole industry, that is, under the background of the increasing contradiction between credit supply and demand at the beginning of the year + LPR quotation, the continuous reduction in December 2021 and January 2022 and the heavy use of refinancing tools, the loan interest rate is facing great downward pressure.
3. Non interest income increased by 50.8% year-on-year to RMB 3.309 billion
In terms of the composition of non interest income, the net income from handling fees and commissions in the first quarter increased by 20.0% year-on-year to RMB 1.481 billion, mainly driven by the growth of handling fees such as financial services. In recent years, the company has continued to promote the transformation of retail business. AUM of 1q retail customers increased by 7.68% to 456.8 billion yuan compared with the end of the previous year. Other non interest net income increased by 90.5% year-on-year to 1.827 billion yuan, mainly contributed by investment income (an increase of 737 million yuan year-on-year), profit and loss from changes in fair value (an increase of 105 million yuan year-on-year) and other subjects.
4. The non-performing loan ratio further decreased to 0.82%, and the provision coverage ratio exceeded 580%
By the end of the first quarter of 2022, Bank Of Hangzhou Co.Ltd(600926) NPL rate was relatively low, with a quarter on quarter decrease of 4bp to 0.82%. The ratio of overdue loans to non-performing loans was 75.32%, and the ratio of loans overdue for more than 90 days to non-performing loans was 64.17%; The proportion of concerned loans was 0.38%, the same as that at the end of the previous year. With the further improvement of asset quality, Bank Of Hangzhou Co.Ltd(600926) still maintained a large provision intensity. In the first quarter, the provision for impairment loss of credit and other assets was 3.016 billion yuan, 157 million yuan more than the same period last year, of which the provision for impairment loss of loans was 1.485 billion yuan. By the end of the first quarter of 2022, Bank Of Hangzhou Co.Ltd(600926) provision coverage was 580.09%, up 12.38pct from the end of the previous year, ranking among the top listed banks.
On April 15, at the press conference of the State Council Information Office on the operation and development of banking and insurance industry in the first quarter of 2022, Wang Chaodi, spokesman of the CBRC, said that large banks with high provision and other high-quality listed banks are encouraged to gradually return the actual provision coverage to a reasonable level. We believe that the policy arrangements related to the adjustment of provision coverage will help encourage Bank Of Hangzhou Co.Ltd(600926) such high-quality listed banks with strong credit extension ability and provision thickness significantly higher than the regulatory requirements to appropriately sink customers and increase credit extension in key areas. At the same time, it also leaves some imagination space for subsequent provisions to feed profits.
5. The expansion of financial statements increased capital consumption, and the capital adequacy ratio at all levels decreased steadily
Due to the rapid expansion of the asset side, the company’s capital adequacy ratio decreased slightly. At the end of the first quarter of 2022, the core Tier-1 capital adequacy ratio / Tier-1 capital adequacy ratio / capital adequacy ratio were 8.17% / 10.00% / 13.08% respectively, and the quarter on quarter ratio decreased by 0.26pct/0.40pct/0.54pct respectively. It is worth mentioning that the company completed the issuance of 15 billion yuan of convertible bonds in 2021. If the conversion is successful, it will effectively supplement the capital adequacy ratio at all levels of the company.
Earnings forecast, valuation and rating Bank Of Hangzhou Co.Ltd(600926) based in Hangzhou and deeply cultivated in Zhejiang, its outlets are mainly distributed in developed economic circles such as the Yangtze River Delta, the Pearl River Delta and the Bohai Bay. In recent years, with the continuous promotion of retail transformation, the growth rate of revenue and profit has been outstanding. In 2021, the new five-year strategic plan made a smooth start, with strong revenue and profit growth. Since the beginning of 2022, the credit supply has been “prosperous in both supply and demand”, and the performance of “good start” in the first quarter is bright. With the superposition of “Hangzhou bank convertible bonds”, there is a large space for equity conversion, and the company has a large potential growth momentum. Maintain the company’s EPS forecast of 1.92/2.34/2.82 yuan in 202224, and the Pb valuation corresponding to the current stock price is 1.08/0.95/0.83 times respectively, maintaining the “buy” rating.
Risk tip: if the negative impact of the epidemic on the economy of the Yangtze River Delta exceeds expectations, it may drag down the pace of corporate credit supply, and the increased downward pressure on the economy may also affect the quality of assets.
