\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 166 Industrial Bank Co.Ltd(601166) )
Event overview
Industrial Bank Co.Ltd(601166) disclosed that the first quarterly report of 2022: 22q1 achieved a revenue of 59.403 billion yuan (+ 6.72%, YoY), an operating profit of 32.335 billion yuan (+ 15.91%, YoY), and a net profit attributable to the parent company of 27.578 billion yuan (+ 15.62%, YoY); At the end of the first quarter, the total assets were 8.82 trillion yuan (+ 10.37%, yoy; + 2.55%, QoQ), deposits were 4.41 trillion yuan (+ 8.23%, yoy; + 2.29%, QoQ), and loans were 4.63 trillion yuan (+ 10.87%, yoy; + 4.54%, QoQ); The non-performing loan ratio is 1.10% (- 0bp, QoQ), the provision coverage ratio is 268.89% (+ 0.16pct, QoQ), and the allocation loan ratio is 2.95% (- 0.01pct, QoQ); Capital adequacy ratio 14.64% (+ 0.25pct, QoQ); Annualized roe18 04%(+0.44pct，YoY)。
Analysis and judgment:
The medium income performance of handling charges was strong, the impairment was less, and the profit was fed back to achieve double-digit growth
Industrial Bank Co.Ltd(601166) in the first quarter, the revenue was + 6.7% year-on-year, slightly down 2.2pct compared with the growth rate of 2021, including: 1) Q1 net interest income under the high base was + 2.4% year-on-year, a slight increase of 0.9pct compared with the growth rate of the whole year last year, and the credit supply was compensated by volume. 2) The revenue support still comes from non interest income, with a year-on-year increase of + 15.1%, down from the high growth rate of 26.7% in 2021, mainly due to the rebound of the base of trading non commission income and the slowdown of growth, which has weakened its contribution to revenue; The net income from handling charges was + 18.8% year-on-year, an increase of 5.6pct over the previous year. Against the background of the pressure on the medium income in the first quarter of the industry, the growth rate rose against the trend. It is expected to benefit from the diversified medium income structure under the commercial investment linkage strategy, which will increase the performance.
The growth rate of revenue was slightly slower. In the first quarter, due to the increase of investment in technology and customer related construction costs, the growth rate of PPOP decreased to – 0.12%, mainly through the less provision of impairment loss by 28.1% year-on-year, and the net profit returned to the parent company was + 15.6% year-on-year. It still maintained double-digit rapid growth and continued the industry leading roe level of 18%.
Q1 put a slight pressure on the public interest margin, and the acceleration of deposit growth supported the subsequent interest margin space
In the first quarter, the steady pace of table expansion continued, with total assets increasing by + 10.4% year-on-year, a marginal increase over the growth rate of 9.0% in the previous year. Among them, the growth rate of loans is basically the same as that of total assets, Q1 + 10.9% year-on-year and + 4.5% month on month, driving the proportion of asset side loans higher than that in the same period of the previous year; At the same time, the company added interbank assets in the first quarter, with a month on month ratio of + 43.0% / + 9.86% respectively. At present, the net increase of loans in the first quarter is 2012 billion yuan. Considering that the company said at the performance press conference that it plans to add 560 billion yuan of new loans in the whole year, the investment progress is 36%, lower than the proportion of 45% in the same period of last year, it is expected that the follow-up investment will be increased.
In terms of loan investment, public and retail loans were + 8.3% / + 1.2% higher than that at the beginning of the year respectively. The scale of bills decreased by 1.6% compared with that at the beginning of the year after a significant expansion of the previous year (with a year-on-year increase of 56%); Therefore, the overall investment is inclined to corporate loans, contributing 91.4% of the loan increment in the first quarter, accounting for an increase of 4.4pct compared with the same period last year, which also reflects the outstanding performance of Societe Generale’s investment in corporate projects under the industry trend of weak financing demand of residents.
The growth of liability side deposits accelerated, with a month on month increase of + 8.2% / + 2.23% respectively. The growth rate was significantly faster than that of the same period last year. The net liability side deposits accounted for 55% at the end of the first quarter, which was basically the same as that at the beginning of the year. However, the scale of demand deposits decreased slightly structurally, mainly contributed by time deposits. At the same time, active liabilities were supplemented, and the scale of bond issuance was + 11.3% / + 9.2% month on month, respectively.
The net interest margin of 22q1 calculated based on the average of the end balance at the beginning of the period was – 14bp / – 12bp respectively on a month on month basis. When the interest payment rate on the liability side fell, it was mainly due to the downward drag on the asset side yield and the pressure on the asset side pricing under the weak credit supply and demand structure. Subsequently, it is expected that with the repair of retail delivery and the improvement of deposit cost rate driven by the reform of deposit pricing mechanism, the convergence range of interest margin will be narrowed.
The asset quality was stable, and the proportion of attention categories fell month on month
The asset quality remained stable in the first quarter, with a non-performing rate of 1.1%, unchanged month on month at the end of last year; Concern loans accounted for 1.5%. After rising for three consecutive quarters, the inflection point was down, slightly down 2bp from the beginning of the year. The provision coverage at the end of the period was 268.89%, an increase of 0.16pct over the beginning of the year.
Investment advice
Industrial Bank Co.Ltd(601166) in the first quarter, the marginal growth rate of performance slowed down, mainly due to the decline of growth rate under the fading effect of other non interest base and the drag of interest margin, while scale and medium income are the two positive contributing factors of revenue. The contrarian increase in the growth rate of handling fee income reflects the effectiveness of the operation of the two tables inside and outside the table. Thanks to the excellent and stable asset quality, the less provision for impairment feeds back the release of profits. Looking forward to the follow-up, the interest margin is expected to improve with the improvement of credit supply and demand structure. Under the layout of wealth business, there is still great room for improvement in the middle income, and there is high certainty in the performance of the year.
In view of the performance of the first quarterly report, we maintain the forecast of the company’s revenue of 2374 / 261.8/291.9 billion yuan in 22-24 years, and the forecast of net profit attributable to the parent company of 95.1/108.8/122.6 billion yuan, with a corresponding growth rate of 15.0% / 14.5% / 12.7%; Maintain eps4 for 22-24 years The forecast of 44 / 5.10 / 5.77 yuan corresponds to the closing price of 21.05 yuan / share on April 28, 2022, and Pb is 0.66/0.59/0.53 times respectively, maintaining the “buy” rating of the company.
Risk tips
1. The risk that the future repair of the overall economy is less than expected and the credit cost increases significantly;
2. Major business risks of the company.
