\u3000\u3 China Vanke Co.Ltd(000002) 142 Bank Of Ningbo Co.Ltd(002142) )
Event: Bank Of Ningbo Co.Ltd(002142) released the first quarter report of 2022. 1q22 achieved revenue / profit before provision / net profit attributable to parent company of RMB 15.26/101.5/5.72 billion, with a year-on-year increase of 15.4% / 17.8% / 20.8% respectively; At the end of the first quarter, the non-performing rate was 0.77%, unchanged month on month, and the provision coverage rate was 524.8%; The weighted average roe was 16.6%, down 1.2pct year-on-year.
Comments:
The performance continued to be excellent and in line with expectations. Q1 the scale of assets increased significantly, the offset interest margin narrowed year-on-year, and the volume premium promoted the rapid growth of net interest income. The slight growth of medium income and high growth of investment income are the main contributing factors to the rapid growth of non interest income. The provision and expenditure are relatively stable. The contribution of scale, interest spread, non interest, provision and cost factors to profitability is + 28.2%, – 15.6%, + 2.8%, – 2.7% and + 2.7% respectively. On the whole, the company has maintained excellent performance and continued high-quality growth.
Points worthy of attention: (1) high growth of corporate loans. As of 22q1, the company’s loans increased by 11.4% over the beginning of the year. It can be seen that the reserves of corporate credit projects are sufficient. The completion of 21q4 share allotment also supports its high expansion table. (2) Deposits performed well. As of 22q1, deposits increased by 23.3% over the beginning of the year, of which corporate deposits increased by 32.7% over the beginning of the year, which is the main source of new deposits. The accelerated release of corporate loans has boosted the growth of deposits, and also verified Bank Of Ningbo Co.Ltd(002142) as the host bank of small and medium-sized enterprises’ strong ability to solicit deposits. (3) The interest rate spread rebounded significantly month on month. The net interest margin of the company last year decreased quarter by quarter. 22q1 net interest margin is 2.24%, and we calculate that it is 17bp higher quarter on quarter. The significant improvement of net interest margin is mainly due to the high increase of deposits, the optimization of debt cost and the high increase of credit, and the optimization of asset structure. We expect that the company’s strong storage capacity is expected to support the stability of net interest margin. (4) The asset quality continues to be excellent and the provision is sufficient. As of 22q1, the non-performing rate and concerned loan rate were 0.77% and 0.51%, maintaining a very low level; The provision coverage rate and loan allocation ratio are 524.8% and 4.06%, with sufficient risk safety cushion and large profit release space.
Core logic:
Deeply plough the Yangtze River Delta and fully benefit from regional economic development Bank Of Ningbo Co.Ltd(002142) has formed a “one body and two wings” pattern with the Yangtze River Delta as the main body and the Pearl River Delta and the Bohai Rim as the two wings. At present, more than 90% of its business is concentrated in the Yangtze River Delta. With developed private economy and strong financial demand in the region, the company will fully benefit from the rapid development of regional economy.
The system and mechanism are better and the degree of marketization is high Bank Of Ningbo Co.Ltd(002142) equity structure is diversified, and the equity structure of mutual checks and balances among state-owned assets, foreign capital and private enterprises has been formed earlier. The shareholding ratio of senior executives is high, and the employee assessment mechanism continues to be optimized. A better market-oriented incentive mechanism will promote the efficient implementation of the company’s strategies.
Adhering to the differentiated development strategy has formed a comparative advantage Bank Of Ningbo Co.Ltd(002142) differentiated development strategy has a clear positioning. The business strategy of “big banks can’t do well, small banks can’t do well” is appropriate, and comparative advantages have been formed in various businesses. The customer base of small and micro enterprises is solid, and the profit center of retail companies has been established earlier to realize the franchise mode of small and micro businesses. At present, small and micro businesses have mature risk control mechanism, rich product system and good market reputation. In addition, the personal consumer loan business, thanks to the company’s early and accurate customer group positioning, has achieved a higher risk return rate in the industry.
Under the focus of large retail and light capital strategy, new profit growth points have been gradually consolidated. The company regards the wealth management business as an important transformation direction, continuously enriches the talent team related to the wealth management business, increases the investment in science and technology, and has a firm strategic transformation. At present, the handling fee income of agency business has increased rapidly, and AUM of individual customers and wealth customers has made continuous breakthroughs. At the end of 2021, Bank Of Ningbo Co.Ltd(002142) individual customers AUM reached 656.2 billion, with a year-on-year increase of 23%; The number of private bank customers reached 13000, with a year-on-year increase of 70%, and the Aum of private bank reached 146.4 billion, with a year-on-year increase of 53%. From the perspective of demand side, Bank Of Ningbo Co.Ltd(002142) customer service ability is strong, and the company lines and retail company lines that have been cultivated for many years have great customer potential; From the supply side, the company has strengthened institutional cooperation, and its product innovation and marketing efforts are also gradually increasing. The combination of supply and demand will promote the rapid growth of wealth management business and contribute new profit growth points.
Investment suggestion: Bank Of Ningbo Co.Ltd(002142) the performance in the first quarter continued to shine, with both deposits and loans booming, the net interest margin rebounded month on month, non interest rates increased rapidly, and asset quality remained excellent. We expect that the size of Bank Of Ningbo Co.Ltd(002142) assets will maintain rapid growth under the background of the completion of share allotment and good regional credit demand, and the net interest income will grow rapidly with the volume premium; Under the guidance of large retail and light capital strategy, the company’s medium income growth is expected to rebound; The excellent investment ability of financial assets that can stand the cycle test will also thicken the company’s profitability during the period of downward interest rate. Under the principle of prudent provision, the provision for impairment shall not be reduced. Based on this judgment, it is estimated that the net profit attributable to the parent company in 2022 and 2023 will increase by 20.6% and 18.9% respectively year-on-year, and the corresponding BVPs will be 23.9 and 28.1 yuan / share respectively. On April 26, 2022, the closing price was 37.01 yuan / share, corresponding to 1.55 times of 22-year Pb. Taking into account the advantages of the company’s “strategic positioning and maintenance” and the strong development potential brought by the “system transformation” mechanism.
Risk tip: the economic stall and downturn lead to the deterioration of asset quality; The continuous spread of the epidemic has seriously affected the normal operation; Unexpected changes in regulatory policies, etc.
