\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 166 Industrial Bank Co.Ltd(601166) )
Matters:
Industrial Bank Co.Ltd(601166) released the first quarter report of 2022. In the first quarter, the operating revenue was 59.4 billion yuan, a year-on-year increase of 6.7%, and the net profit attributable to the parent company was 276 yuan, a year-on-year increase of 15.6%.
Ping An View:
The performance is in line with expectations, and the performance of non interest income is better than that of peers Industrial Bank Co.Ltd(601166) 2022: the net profit attributable to the parent company in the first quarter increased by 15.6% (vs + 24.1%, 21a) year-on-year, slightly lower than that in 21 years, but still maintained a rapid level, in line with our expectations. From the revenue side, the company's revenue in the first quarter increased by 6.7% (vs + 8.9%, 21a), slightly lower than that in 21 years. In terms of splitting, the low growth of interest income was the main drag factor, with a year-on-year increase of 2.4% (vs + 1.5%, 21a) in the first quarter, maintaining a low level. In contrast, non interest income still performed well, with a year-on-year growth rate of 15.1%, still maintaining a double-digit level, especially the middle income, with a year-on-year growth rate of 18.8% (vs + 13.2%, 21a). It rebounded against the backdrop of the downturn in the capital market in the first quarter. It is expected to be mainly driven by the financial management and investment banking sectors, Industrial Bank Co.Ltd(601166) "commercial bank + investment bank" differentiated competitive advantage continues to be reflected.
The asset side dragged down the interest margin, and the credit supply was active at the beginning of the year. We calculated the company's single quarter annualized net interest margin of 1.80% (vs 1.88%, 21q4) in the first quarter according to the caliber at the end of the initial period, with a month on month decrease of 8bp. We believe that the reason for the narrowing of interest margin is mainly due to the drag of the downward pricing level of the asset side. We calculated that the company's Q1 single quarter annualized interest bearing asset yield was 3.87% according to the caliber at the end of the initial period, with a month on month decrease of 14bp, which is the same as the industry trend. At the beginning and end of the period, the company's quarterly annualized debt cost rate in the first quarter was 2.23%, down 6BP month on month, and the end of some hedging assets narrowed. In terms of scale, the company's asset scale expanded steadily in the first quarter of 2022. At the end of the first quarter, the total asset scale increased by 2.6% compared with the beginning of the year, of which the loan scale increased by 4.5% compared with the beginning of the year. The credit supply remained positive, the structure was mainly inclined to the public, and the scale of corporate loan / retail loan increased by 8.3% / 1.2% respectively compared with the beginning of the year. On the liability side, the deposit scale at the end of the first quarter increased by 2.3% compared with the beginning of the year, with a year-on-year increase of 8.2% (vs + 6.6%, 21q4).
The quality of assets was stable and the ability of risk offsetting was improved. The non-performing rate of the company in the first quarter of 2022 was 1.10%, a year-on-year decrease of 8bp, unchanged month on month from the beginning of the year, and maintained the best level in six years. We estimate that the company's Q1 single quarter annualized non-performing rate is 0.69%, down 33bp month on month, and the marginal improvement of non-performing rate. In terms of forward-looking indicators, the concern rate of the company in the first quarter of 2022 was 1.50% (vs 1.52%, 21q4), down 2bp month on month, and the potential risk pressure was controllable. In the first quarter of 2022, the provision coverage rate of the company was 269%, with a month on month increase of 16bp and a month on month decrease of 1bp. The overall provision coverage level remained abundant and the risk offset capacity was consolidated.
Investment suggestion: maintain excellent profitability and continue to be optimistic about the valuation and repair space. Societe Generale has a flexible system and mechanism. Focusing on the layout of "commercial banks + investment banks", it continues to promote business transformation in the direction of light capital, light assets and high efficiency. At present, the company's on balance sheet and off balance sheet businesses have developed in a balanced way, and roe has always been in the forefront of joint-stock banks. In 2021, the company proposed to build three golden business cards of green bank, fortune bank and investment bank in the future. We are optimistic about the long-term development space of relevant tracks. The company's profit growth rate is 14.5% - 22.5%, corresponding to EPS 14.5/2/24, respectively. At present, the Pb of Industrial Bank Co.Ltd(601166) corresponding to 22-24 years is 0.66x/0.59x/0.52x respectively. The current valuation of the company is still in the bottom range. It is optimistic that the company will continue its advantages in investment banking and asset management in the future and maintain the "strongly recommended" rating.
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.
