\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 398 Industrial And Commercial Bank Of China Limited(601398) )
Event:
On April 29, Industrial And Commercial Bank Of China Limited(601398) released the first quarter report of 2022. In the first quarter, the operating revenue was 249467 billion, yoy + 6.5%, and the net profit attributable to the parent company was 90.637 billion, yoy + 5.7%.
Comments:
Revenue growth was stable and provision was made prudently. The year-on-year growth rates of Q1 Industrial And Commercial Bank Of China Limited(601398) revenue and net profit attributable to parent company in 2022 were 6.5% and 5.7% respectively, and the growth rates were – 0.3 and – 4.5pct respectively compared with 2021, of which the year-on-year growth rate of net interest income was 6.4%, a decrease of 0.4pct compared with 2021. From the perspective of splitting the profit growth structure, (1) scale expansion and improvement of non interest income are still the main contributions, driving the performance growth rate of 13.9% and 7.1% respectively, with changes of – 2 and 1.8pct respectively compared with 2021. (2) The contribution of provision to profit was – 9%, down 9pct from 2021, indicating that the company still maintained a more prudent provision strategy.
Credit extension plays a “head goose effect”. In the first quarter of 2022, the loan growth rate was 10.9%, which was basically the same as that in 2021. The new scale was 216 billion yuan, an increase of 21.2 billion yuan year-on-year. Under the circumstances of economic pressure and weak demand, the company, as a leading state-owned bank, played the “head goose effect” of stabilizing credit, and the new RMB loans still increased year-on-year. In terms of loan structure, corporate loans increased by 129.4 billion yuan, a year-on-year increase of 11.2 billion yuan, retail loans increased by 80.7 billion yuan, a year-on-year increase of 7 billion yuan, and the stock decreased by 0.5pct compared with Q1 in 2021. It is expected that the epidemic situation in Shanghai and other places has repeatedly affected the Yangtze River Delta, and the credit supply has been affected to a certain extent. Deposit absorption has been strengthened and the debt structure has been continuously optimized. In the first quarter of 2022, the growth rate of deposits was 7.5%, an increase of 2.7pct compared with 2021, while the growth rate of bonds payable was – 2%, a change of – 1.2pct compared with 2021. In fact, in the first quarter of this year, the mismatch between the source and application of funds in the deposit and loan sector of large state-owned banks intensified, and the demand for the volume and price of interbank certificates of deposit was high. However, the growth of Industrial And Commercial Bank Of China Limited(601398) deposits maintained a steady and positive trend as always, the active liability management did not rely on interbank certificates of deposit for supplement, and the liability structure continued to be optimized.
Nim runs basically stably. In the first quarter of 2022, the NIM of the company was 2.1%, a slight decrease of 1bp compared with 2021, and basically remained stable. The calculation results show that the rate of return on interest bearing assets in the first quarter was 3.44%, down 3 BP compared with 2021, and the cost rate of interest bearing liabilities was 1.64%, up 4 bp compared with 2021. The “squeeze” of pricing at both ends of assets and liabilities is also a common pressure faced by the whole banking industry, but the company’s debt structure is more “solid”, so that it has not been impacted by the rise of Q1 interbank deposit certificate interest rate on the cost of liabilities, which is also conducive to the stable operation of NIM.
Asset quality remained stable. At the end of the first quarter of 2022, Industrial And Commercial Bank Of China Limited(601398) NPL ratio was 1.42%, unchanged from the end of 2021, and provision coverage was 209.91%, increased by 4.07pct from the end of 2021. In 2022, Q1 credit impairment increased by 70.662 billion, with a year-on-year growth rate of 12.4%, an increase of 12.4pct compared with 2021. Overall, Industrial And Commercial Bank Of China Limited(601398) still maintains a more prudent provision strategy, but under the policy guidance of the national standing committee to encourage large banks to moderately reduce the provision coverage, it is expected that there is some room for mitigation of subsequent provisions.
The capital adequacy ratio increased steadily. At the end of the first quarter of 2022, Industrial And Commercial Bank Of China Limited(601398) core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio were 13.43%, 15.04% and 18.25% respectively, with quarter on quarter improvements of 0.12, 0.10 and 0.23 PCT respectively. At the end of the first quarter, the year-on-year growth rate of the company’s risk weighted assets was 7.24%, with a quarter on quarter decrease of 0.54pct.
Earnings forecast, valuation and rating Industrial And Commercial Bank Of China Limited(601398) as a leading state-owned bank, all business indicators have maintained steady operation under macroeconomic pressure and the impact of the epidemic. Under the guidance of strengthening the debt cost control policy, the company’s better debt structure has also laid the foundation for it to fully enjoy the policy dividend. It is expected that the subsequent company’s debt cost and Nim have the foundation for stable operation. Therefore, we maintain the EPS forecast of 20222024 at 1.05/1.12/1.17 yuan, and the corresponding Pb of the current stock price is 0.54/0.49/0.45 respectively, maintaining the “buy” rating.
Risk tip: credit easing is less than expected, and commodity prices continue to rise.
