The first quarterly report of listed banks has been disclosed. According to statistics, under the background that the national Standing Committee encouraged large banks with high provision level to reduce the provision rate in an orderly manner, a total of 8 listed banks, including Postal Savings Bank Of China Co.Ltd(601658) , China Merchants Bank Co.Ltd(600036) , took the lead in reducing the provision coverage in the first quarter.
Analysts pointed out that the higher the provision coverage rate, in theory, it means that commercial banks have a more leisurely ability to deal with risk losses, and it is the most ideal situation for the provision rate level to adapt to the risk degree of the bank. Some banks have room to reduce the provision coverage, but the decline of the provision coverage will be a slow process. There will be some differences in whether the provision coverage will be reduced, the reduction range and the time node in combination with their own actual situation.
China Merchants Bank‘s provision coverage decreased the most
Large banks are the first to reduce the provision rate advocated by the national Standing Committee Postal Savings Bank Of China Co.Ltd(601658) ranks first among the six large banks with a provision coverage of 418.61%. According to the data of the first quarterly report, Postal Savings Bank Of China Co.Ltd(601658) also took the lead in reducing the provision coverage in the first quarter. At the end of the first quarter, the provision coverage of the bank was 413.58%, down 5.03 percentage points from the end of the previous year.
In addition to large banks, joint-stock banks, urban commercial banks and rural commercial banks also took the initiative to reduce the provision coverage in the first quarter.
China Merchants Bank Co.Ltd(600036) decreased the most, and its provision coverage decreased by 21.19 percentage points to 462.68% compared with the end of the previous year China Minsheng Banking Corp.Ltd(600016) provision coverage dropped to 143.11%, down 2.19 percentage points from the end of last year.
In addition, Bank Of Ningbo Co.Ltd(002142) in the first quarter, the provision coverage decreased by 0.74 percentage points to 524.78% The provision coverage of Bank Of Guiyang Co.Ltd(601997) , Bank Of Xi’An Co.Ltd(600928) , Bank Of Chongqing Co.Ltd(601963) , Bank of Lanzhou and other banks also decreased by 3-11 percentage points compared with the end of last year. In ABC, Shanghai Rural Commercial Bank Co.Ltd(601825) provision coverage was 430.29%, a decrease of 12.21 percentage points over the end of the previous year.
Among the above eight banks with decreased provision coverage, the provision coverage of China Merchants Bank Co.Ltd(600036) , Bank Of Ningbo Co.Ltd(002142) , Shanghai Rural Commercial Bank Co.Ltd(601825) is in the forefront of joint-stock banks, urban commercial banks and rural commercial banks, and the provision rate at the end of 2021 is more than 400%. Guiyang, Xi’an and Bank Of Chongqing Co.Ltd(601963) are in a downward state at the end of 2021 compared with the end of the previous year, and the provision coverage of the three banks is between 220% – 280%. In addition, the provision coverage of China Minsheng Banking Corp.Ltd(600016) , Bank of Lanzhou decreased in the first quarter was less than 200%.
In addition, according to the first quarterly report, the provision coverage of most listed banks is still higher than that at the end of the previous year. Among the six major banks, the provision coverage rate of ABC in the first quarter was 307.50%, an increase of 7.77 percentage points over the end of the previous year; ICBC’s provision coverage increased by 4.07 percentage points to 209.91%. Bank of China and Bank Of Communications Co.Ltd(601328) provision coverage were lower than 200%, up 0.49 percentage points and 0.16 percentage points respectively over the end of the previous year. Among urban commercial banks, the provision coverage rate of Bank Of Hangzhou Co.Ltd(600926) , which ranked first at the end of 2021, continued to increase by 12 percentage points to 580.09% in the first quarter.
some banks’ net profit growth increased significantly
According to a person in the banking industry, since the provision coverage ratio is the ratio of loan impairment provision to total non-performing loans, one of the most important means for banks to reduce the provision coverage ratio is to reduce the accrued loan impairment provision accordingly, which will help to improve the bank’s net profit, increase the bank’s core Tier-1 capital through retained earnings, and then improve the bank’s credit lending capacity.
From the perspective of the eight banks with decreased provision coverage in the first quarter, the growth rate of net profit attributable to the parent of four banks increased compared with the same period of the previous year. Among them, Postal Savings Bank Of China Co.Ltd(601658) the growth rate of net profit attributable to parent company in the first quarter was significantly higher than that in the same period of last year. According to the data, the net profit attributable to the parent bank in the first quarter was 25.026 billion yuan, a year-on-year increase of 17.34%, the fastest growth rate for the six major banks, and the net profit growth rate of the bank in the same period of the previous year was 5.5%; The growth rate of the net profit attributable to the parent company of Lanzhou bank in the first quarter was also much higher than that in the same period of last year. The net profit attributable to the parent company of Lanzhou bank in the first quarter increased by 94.05% year-on-year and 6.8% year-on-year; In addition, Bank Of Ningbo Co.Ltd(002142) the year-on-year growth rate of net profit attributable to parent company in the first quarter was about 2% higher than that in the same period of last year, while the decline of China Minsheng Banking Corp.Ltd(600016) was narrowed.
The data show that the provision coverage rate of the above four banks decreased by 1-5 percentage points. However, in comparison, the growth rate of net profit attributable to parent company of China Merchants Bank Co.Ltd(600036) in the first quarter with the largest decrease in provision coverage did not increase compared with the same period of last year.
“The provision coverage can be adjusted regularly according to the actual economic needs, which is a counter cyclical regulation means.” Zeng Gang, deputy director of the national finance and development laboratory, explained to the associated press that generally speaking, when the economy is on the rise, banks have low non-performing products and high profits, regulators may require banks to turn some profits into provisions, so as to improve the provision coverage and thicken the safety cushion; On the contrary, when the downward pressure of the economy is relatively large, the non-performing assets rise or the bank profits decrease, the supervision can appropriately require the bank to reduce the provision coverage, release some profits, make up for the apology with abundance, and convert them into capital, so as to enhance the ability of the bank to write off bad debts and increase credit to the real economy.
In the view of insiders, the national Standing Committee encourages large banks with high provision level to reduce the provision rate in an orderly manner, which is not intended to encourage banks to increase profit growth, but to guide banks to further support the real economy.
the NPL rate of 3 banks increased
Some insiders believe that in addition to releasing more funds by reducing the provision, improving the tolerance of non-performing loans can also achieve the purpose of reducing the provision coverage of banks. The source said that in special periods, it should also be allowed to moderately improve the tolerance of banks for bad loans, so as to enhance the support for some high-risk small and micro enterprises, new citizens and other fields. The supervision may weaken the assessment requirements for the decline of non-performing rate of large banks, and the assessment indicators of non-performing may be adjusted appropriately within the bank in the future.
In terms of the non-performing rate of banks with decreased provision coverage, the non-performing rate of some banks increased China Merchants Bank Co.Ltd(600036) non performing rate was 0.94%, a slight increase of 0.03 percentage points over the end of the previous year Bank Of Guiyang Co.Ltd(601997) the non-performing rate at the end of the first quarter was 1.61%, an increase of 0.15 percentage points over the end of the previous year. Although the non-performing rate has increased, the two banks are far lower than the overall non-performing rate of the banking industry of 1.79% in the first quarter according to the statistics of the CBRC.
In comparison, the non-performing rate of Lanzhou bank increased by 0.09 percentage points to 1.82% compared with the end of the previous year, slightly higher than the overall non-performing rate of the banking industry in the first quarter according to the statistics of the CBRC.
However, the Bank Of Xi’An Co.Ltd(600928) , Shanghai Rural Commercial Bank Co.Ltd(601825) non-performing rate of Bank Of Xi’An Co.Ltd(600928) , Shanghai Rural Commercial Bank Co.Ltd(601825) which decreased by 3.9% and 12.21% respectively in the first quarter did not increase, decreased by 0.07 percentage points and 0.01 percentage points respectively compared with the end of the previous year.
Zeng Gang believes that the banking industry is highly differentiated, and the provision coverage rate of some banks far exceeds the regulatory requirements. There is room and conditions for moderately releasing profits; However, the provision coverage of some banks is relatively low, only slightly higher than the regulatory requirements. These banks have limited room for reduction, so different banks need to operate according to the actual situation.
