\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 908 Wuxi Rural Commercial Bank Co.Ltd(600908) )
Event:
On April 27, Wuxi Rural Commercial Bank Co.Ltd(600908) released the annual report of 2021 and the first quarterly report of 2022:
1) in 2021, the operating revenue was 4.349 billion yuan, yoy + 11.6%, and the net profit attributable to the parent company was 1.58 billion yuan, yoy + 20.5%. The weighted average return on net assets was 11.41%, yoy + 0.57pct.
2) in the first quarter of 2022, the operating revenue was 1.198 billion yuan, yoy + 9.1%, and the net profit attributable to the parent company was 444 million yuan, yoy + 22.5%. The weighted average return on net assets was 12.68%, yoy + 2.44pct.
Comments:
Cost control supported further higher profit growth. Affected by the slowdown in the growth of non interest and net interest income, the growth of the company's revenue slowed down in 2021, but with the support of provisions, the profit growth increased by 1.1pct to 20.5% quarter on quarter; In the first quarter of 2022, the growth rate of the company's revenue further narrowed, but the profit growth rate supported by expense control further increased. The company's 22q1 cost income ratio was 24.4%, down 2.04pct year-on-year. The year-on-year growth structure of 22q1 was carefully dismantled, with scale and non interest income as the main contribution sub items. The negative impact of the cost side narrowed significantly quarter on quarter, and the negative contribution of provision widened quarter on quarter.
The speed of table expansion slowed down, and the asset side expanded significantly driven by credit supply. In 2021 and 22q1, the year-on-year growth rate of the company's total assets was 12.1% / 8.9% respectively. Since 21q4, it has slowed down quarter by quarter, which has a certain drag on the net interest income. Credit supply also showed a slowing trend. The growth rate of credit in 2021 and 22q1 was 18.2% / 13.0% respectively, but the focus of asset side allocation of the company was inclined to credit, and the proportion of credit in interest bearing assets increased quarter by quarter. In 21q3 – 22q1, the proportion of credit was 57.2% / 58.4% / 58.7% respectively, and the asset structure was further optimized.
Corporate loans still play a "ballast" role, and retail loans increased significantly year-on-year. In the 21st year, the company's new loans increased by 18.117 billion, an increase of 3.354 billion year-on-year. The new corporate, retail and bills accounted for 52.2%, 41.9% and 5.9% of the new loans respectively. Specifically, 1) corporate loans increased by 9.45 billion, which was basically the same as that in the same period of last year. Corporate credit resources focused on leasing, commercial services and manufacturing, and their new scale accounted for 42% and 26.1% of the new loans respectively; 2) Retail credit increased by 7.594 billion, an increase of 4.093 billion year-on-year. The new personal loans were mainly concentrated in personal housing loans. In the first quarter, the new personal housing loans accounted for 80.8% of the new retail credit. In the past 21 years, the company has significantly increased the investment in retail, especially personal housing loans, and promoted the proportion of retail credit to increase quarter by quarter. From 21q1 to 21q4, the proportion of retail loans is 17.9% / 19.1% / 20.6% / 21.3% respectively. Judging from the situation in the first quarter of 2022, the scale of new loans was 4.493 billion, with a year-on-year decrease of 3.202 billion. Structurally, we still focus on corporate loans. In the first quarter, new corporate loans accounted for 67.1% of the scale of new loans.
The proportion of deposits rose to 89%, and the debt structure was further optimized. The growth rate of deposits and total liabilities of the company slowed down to 221.8% year-on-year at the end of Q1 and 2020t respectively, while the growth rate of total deposits was slightly higher than that of Q1 and 2020t respectively. The high increase in deposits led to the further optimization of the debt structure. The proportion of 22q1 deposits, bonds payable and interbank liabilities in interest bearing liabilities was 88.9%, 3.9% and 7.2% respectively, with changes of 1.9, - 1 and - 0.9pct respectively compared with the beginning of the year.
Nim operation is expected to be under pressure, but it has a foundation for stable operation. In 2021, the NIM of the company was 1.95%, a decrease of 1bp compared with 1h21. In 22q1, the net interest income of the company in a single quarter decreased by 3.0% month on month, while the interest bearing assets increased by 3.2% month on month. It is expected that the NIM of the company will decline quarter on quarter. The estimated value shows that the interest margin of the company in the first quarter of 22 years decreased by about 11bp compared with the beginning of the year. At this stage, the pressure on interest margin is the comprehensive result of the increasing contradiction between credit supply and demand and the rigidity of debt cost: on the one hand, since the end of 21, the continuous reduction of LPR quotation and the large amount of refinancing instruments have made the loan interest rate face great downward pressure; On the other hand, the pressure of stabilizing and increasing deposits keeps the debt cost of the banking system relatively rigid. However, at the same time, we must also pay attention to the company's strong ability to obtain core liabilities. The proportion of Wuxi Rural Commercial Bank Co.Ltd(600908) deposits ranks second among listed banks (21q3), second only to Postal Savings Bank Of China Co.Ltd(601658) , and the incremental deposit loan ratio of 22q1 is 46.5%. It is expected that the upward pressure on the subsequent debt cost of the company is relatively limited, and Nim has a foundation for stable operation.
Net other non interest income recorded a good performance, and the proportion of 22q1 non interest income rose to 26%. In 2021 and 22q1, the year-on-year growth rate of the company's non interest income was 36.6% / 21.1% respectively, of which the year-on-year growth rate of net handling fee and commission income was 3.9%, - 29.7% respectively, and the year-on-year growth rate of net other non interest income was 49.6% / 53.9% respectively. The growth of the company's non interest income slowed down, which was mainly dragged down by the income of handling fees and commissions, but the net other non interest income still maintained a high growth, mainly due to the contribution of investment income. It is expected that the company will better grasp the band opportunity and obtain better capital gains in Q1 this year.
The non-performing provision rate rose to 520%. Since 21q2, Wuxi Rural Commercial Bank Co.Ltd(600908) NPL ratio has remained at 0.93% for three consecutive quarters, and further decreased to 0.87% in 22q1. Meanwhile, NPL decreased by 30 million quarter on quarter, realizing the "double decrease" of NPL index; The concern rate of 22q1 decreased by 0.05pct to 0.24% quarter on quarter, and the pressure of bad products further decreased. At the end of 22q1, the company's provision coverage rate was 519.9%, a significant increase of 42.8pct compared with the beginning of the year, mainly due to the decrease of non-performing loan balance quarter on quarter, while the company maintained a prudent provision policy, and the credit impairment loss / average total assets increased by 0.13pct to 0.8% compared with the beginning of the year.
Earnings forecast, valuation and rating Wuxi Rural Commercial Bank Co.Ltd(600908) based in Wuxi and deeply cultivated in Jiangsu, it has obvious location advantages and enjoys strong dividends in banking and government business cooperation. Credit is mainly for corporate business and mainly invested in manufacturing, leasing and business services. Retail loans are inclined to high-yield loans such as mortgage + consumer loans. The asset quality is significantly better than that of peers, and the proportion of concerned loans is relatively low. Good asset quality is the "ballast" for steady growth of performance. The further consolidation of provision coverage also greatly expands the space for profit adjustment. In the future, considering that the "steady growth" policy is expected to continue to be introduced to promote the realization of the economic growth target, we raised the EPS forecast for 20222023 to 1.00 yuan (6.4%) yuan / 1.16 yuan (10.5%) yuan, increased the EPS forecast for 2024 to 1.32 yuan, and the corresponding Pb valuation of the current stock price is 0.68/0.61/0.55 times respectively, maintaining the "buy" rating.
Risk tip: if the macro economy goes down more than expected, it may increase the potential risk of large risk exposure.
