\u3000\u3 China Vanke Co.Ltd(000002) 142 Bank Of Ningbo Co.Ltd(002142) )
Matters:
Bank Of Ningbo Co.Ltd(002142) released the first quarter report of 2022. In the first quarter, the company achieved an operating revenue of 15.26 billion yuan, a year-on-year increase of 15.4%, and the net profit attributable to the parent company was 5.72 billion yuan, a year-on-year increase of 20.8%, with an annualized roe16.5% 6%, down 1.2pct from the same period last year, unchanged month on month. The total assets at the end of the period were 2.22 trillion yuan, an increase of 10.1% over the beginning of the year.
Ping An View:
The performance was in line with expectations, and the handling charges dragged down the revenue. The growth rate of the company’s net profit attributable to the parent company slowed down in the first quarter, with a year-on-year increase of 20.8% (vs + 29.9%, 21q4), mainly due to the decrease in the growth rate of revenue compared with 21 years. From the revenue side, the revenue increased by 15.4% (vs + 28.4%, 21q4) year-on-year, and the decline in growth was mainly dragged down by the handling fee income. We judged that the downturn in the capital market in the first quarter had an impact on the relevant wealth management business. Specifically, the company’s net income from handling fees and commissions in the first quarter increased by 0.9% (vs + 30.3%, 21q4) year-on-year, and the proportion in revenue in a single quarter decreased to 11.9%. Among other non interest, the growth of investment income continued to be strong, with a year-on-year increase of 64.1% (vs + 36.5%, 2021a), and the proportion of revenue in a single quarter increased by 7.0pct to 23.5% year-on-year. The company’s net interest income in the first quarter increased by 12.6% (vs + 17.4%, 21q4) year-on-year, and the growth remained stable, accounting for 62.2% in a single quarter.
The interest rate spread rebounded month on month, and the advantage of attracting reserves was strengthened. The company’s net interest margin in the first quarter was 2.24% (vs 2.21%, 2021a), stable and positive. We believe that the month on month recovery of interest margin is due to the decline of liability side cost, which effectively hedged the impact of the decline of asset side yield. In terms of scale, the assets expanded steadily. At the end of Q1, the total assets increased by 10.1% compared with the beginning of the year, and the loan scale increased by 7.8% compared with the beginning of the year. The structure was relatively stable. Among them, corporate loans / personal loans increased by 10.8% / 2.0% respectively compared with the beginning of the year, reflecting that the enterprise credit demand in the company’s main business areas remained strong. The debt side deserves attention. In the face of the increasing pressure of the industry, especially small and medium-sized banks, the company, as a benchmark of urban commercial banks, further strengthened its deposit advantage. The deposit at the end of Q1 increased by 23.3% compared with the beginning of the year, with a year-on-year increase of 25.2% (vs + 13.8%, 21q4), significantly exceeding expectations. Structurally, both the public and private sectors maintained rapid growth, and corporate deposits / personal deposits increased by 25.2% / 16.1% respectively over the beginning of the year.
The asset quality is better than that of peers, and the provision coverage level remains high. The company’s non-performing rate at the end of the first quarter was 0.77%, unchanged month on month, and remained at a low level in the same industry. We estimate that the company’s Q1 single quarter annualized non-performing generation rate is 0.84%, a year-on-year decrease of 21bp, and the non-performing generation rate also remains low. In terms of forward-looking indicators, the company’s concern rate at the end of the first quarter was 0.51%, up 3bp month on month, but the absolute level is still low. In general, all indicators of asset quality are at the leading level in the industry. We don’t think we need to worry too much about the company’s asset quality. At the end of the first quarter, the provision coverage rate of the company was 525%, with a slight decrease of 0.74pct month on month and a loan allocation ratio of 4.06%, with a rise of 3bp month on month. The provision coverage level is still ahead of the peers, and the risk offset ability is outstanding.
Investment suggestion: the management makes a smooth transition and is optimistic about the company’s high profitability Bank Of Ningbo Co.Ltd(002142) as the benchmark of urban commercial banks, it has benefited from the diversified ownership structure, market-oriented governance mechanism and the strategic determination brought by the stable management team. Its assets and liabilities have expanded steadily and its profitability is ahead of its peers. Since the first quarter, the company’s management has achieved a smooth transition and maintained excellent asset quality. At present, the provision coverage level of more than 500% has supported the company’s steady operation and performance flexibility. Over the years, the company has deeply cultivated the customer base of small and micro enterprises, steadily increased the scale of small and micro loans, and continued to focus on the expansion of large retail business and light capital business. Therefore, we continue to be optimistic about the sustainability of the rapid growth of the company’s profits. Combined with the company’s first quarterly report, we maintain the company’s profit forecast for 22-24 years, with corresponding EPS of 3.64/4.36/5.20 yuan and corresponding profit growth rate of 23.0% / 19.7% / 19.4% respectively. At present, the Pb of Bank Of Ningbo Co.Ltd(002142) corresponding to 22 / 23 / 24 years is 1.5x/1.3x/1.1x respectively. In view of the company’s profitability and asset quality leading the industry, the rating of “strongly recommended” is maintained.
Risk tips: 1) macroeconomic downturn leads to higher than expected pressure on asset quality of the industry. 2) The decline in interest rates led to a narrower than expected industry interest margin. 3) The increase of cash flow pressure of real estate enterprises leads to the rise of credit risk.
