Six concerns of the annual report
Comparison of corporate business: how do banks “make money”? Whose “gross profit” is higher?
Real estate: how about the exposure and risk of each bank?
Bank convertible bonds: high-quality banks are close to the mandatory redemption price and are expected to supplement the core tier 1 capital
Deposit: the competitive pressure intensifies and the cost is still relatively rigid
Provision for non credit assets: how does it affect profits?
Detailed explanation and comparison of retail business:
Contribution of retail business: it has been continuously improved in the past few years
Traditional deposit and loan: big banks with their own characteristics, CMB has strong deposit advantages, and Ningbo Ping An and other loans are strong
Wealth management: AUM, customers, structure, financial transformation, etc
Retail business change tracking: wealth management, deposit and loan
Integrity | responsibility | inclusiveness | win-win
Under the environment of “steady growth” and pressure on short-term retail business, many banks’ corporate business grew rapidly, supporting the rapid growth of performance. We integrate the latest corporate business data of each bank’s annual report, comprehensively split and compare the characteristics and advantages of each bank’s corporate business.
Comprehensive financial services: corporate non interest income of ICBC, China Merchants Bank, Ping An and Ningbo exceeds 20% of their corporate business income
In corporate business, state-owned banks + joint-stock banks often serve customers through comprehensive financial services (deposits and loans, commercial banks + investment banks, transaction banks, etc.), and their non interest income in corporate business accounts for more than 10%, of which ICBC (24%), China Merchants Bank (22%) and Ping An (24%) account for a higher proportion. In 2021, the total amount of corporate customer financing (FPA) of China Merchants Bank was close to 5 trillion, more than twice its corporate loans, while Ping An Bank Co.Ltd(000001) was backed by Ping An Insurance (Group) Company Of China Ltd(601318) and achieved a complex investment and financing scale of 1.16 trillion through the linkage of group resources.
In addition, the proportion of non interest income in Ningbo (25%), Shanghai (18%) and Jiangsu (16%) in the Yangtze River Delta is also high. For example, Bank Of Ningbo Co.Ltd(002142) according to the characteristics of local small and micro enterprises and export enterprises, Bank Of Ningbo Co.Ltd(002142) has created a package of comprehensive financial service schemes (product system represented by “five management + two treasures”) to comprehensively serve corporate customers in international business, financial market agent business, investment banking and other aspects.
The non interest income of most urban commercial banks and rural commercial banks is less than 5%. At present, they still focus on deposit and loan business. (Note: in the data disclosed by China Merchants Bank, Ping An and Bank Of Shanghai Co.Ltd(601229) bank, the corporate business includes the financial market business. In the income, we exclude the investment income for calculation, or there is a certain discrepancy with the actual value; Societe Generale, Shanghai Pudong Development Bank and other banks have not disclosed the relevant data of corporate business segments for the time being)
Deposit and loan business: after comprehensive consideration of deposit and loan scale, interest rate, non-performing assets, expenses and other factors, Bank Of Ningbo Co.Ltd(002142) , Bank Of Chengdu Co.Ltd(601838) corporate business “making money” benefit is better.
Large state-owned banks: deposits and loans are relatively balanced: the scale of corporate deposits and loans is basically the same, and its corporate loan yield (4.05%) basically covers the management rate (about 0.6%), corporate deposit cost rate (1.56%) and corporate non-performing rate (1.96%).
Stock bank: if the princess is a “deposit deposit”. In short, the interest rate of corporate loans of joint-stock banks (4.29%) can hardly cover its non-performing (1.71%), expenses (about 1%) and capital cost (2.2%). However, its corporate business deposits totaled 24.9 trillion, 16.2 trillion higher than corporate loans, and the surplus deposits of 8.6 trillion were used to support retail and financial market businesses. It is worth noting that the deposit cost rate of joint-stock banks is highly differentiated. For example, China Merchants Bank has prominent advantages in strategic customers. Its corporate deposit is nearly twice that of loans, and the corporate cost rate is only 1.59%, which is significantly lower than the average level of joint-stock banks (1.94%).
Small and medium-sized banks: each has its own characteristics, which can be roughly divided into three categories:
1) the deposit dominated banks, such as Bank Of Shanghai Co.Ltd(601229) , Bank Of Beijing Co.Ltd(601169) and so on, although their corporate loan yield is not high (4.41%, 4.25%), their corporate deposits are deposited well (the corporate deposit loan ratio is only 69%, 82%), and the cost rate is low ( Bank Of Shanghai Co.Ltd(601229) corporate cost rate is 1.91%, and Bank Of Beijing Co.Ltd(601169) overall deposit cost rate is only 1.97%, which are lower than the average level of the industry).
2) the banks mainly engaged in loans, mainly those in the central and western regions, such as Guiyang, Chongqing, Zhengzhou, Lanzhou, etc., have a corporate loan yield of more than 5.5%, and the loan scale is much larger than the deposit scale (retail deposits to support corporate investment). They need to absorb funds from the retail end to support corporate investment. The control of loan yield and asset quality is very important for them.
3) for banks with “two hands” on deposits and loans, such as Ningbo, Hangzhou, Nanjing and Chengdu, corporate deposits are an important source of deposits. While the ratio of corporate deposits to loans is less than 100%, the yield of corporate loans is not low (basically more than 4.8%). Among them, Bank Of Ningbo Co.Ltd(002142) , Bank Of Chengdu Co.Ltd(601838) deposit and loan advantages are good, the deposit side to corporate deposit loan ratio is 55% and 91% respectively, and the cost rate is only 1.62% and 1.54%, which is the lowest among urban commercial banks; The loan interest rates were 4.84% and 5.06% respectively (higher than the average 4.79% of urban commercial banks); The non-performing rate was only 0.54% and 1.16% (lower than the average 1.37% of urban commercial banks). From the perspective of scale, the average growth rate of corporate loans of the two banks in recent three years is as high as 23.4% and 29.6%, and the expansion speed is significantly higher than that of the same industry. From the perspective of income, the “gross profit margin” of corporate loans of the two banks are 0.94% and 0.75% respectively, significantly ahead of the industry.
