Key investment points
Profit growth: rapid increase in profits and decline in revenue
22q1 listed banks’ net profit attributable to parent increased by 8.6% year-on-year, returning to normal growth. The profit growth rate decreased by 4.0pc compared with 2021a, which is in line with our previous and market expectations. ① In terms of driving factors, due to the high impairment loss, the base effect subsided and the growth rate of non interest income decreased. ② In terms of sub sectors, the growth rates of 22q1 profits of various banks from high to low are agricultural commercial banks (17.9%), urban commercial banks (14.4%), joint-stock banks (9.4%) and state-owned banks (7.3%). Among them, the profit growth rate of rural commercial banks increased by 2.2pc compared with 2021, and the profit growth rate of other types of banks fell. ③ In terms of individual stocks, the differentiation between banks continues. Banks with strong investment capacity and excellent asset quality, such as small and medium-sized banks in the Yangtze River Delta and high-quality national banks, have a high profit growth rate.
The revenue growth rate of 22q1 listed banks was 5.6% year-on-year, down 2pc from 2021. 22q1 revenue growth rates from high to low are urban commercial banks (8.4%), state-owned banks (6.2%), rural commercial banks (6.0%) and joint-stock banks (3.6%).
Business characteristics: analysis and Prospect of driving factors
Scale growth increased. (1) Review Q1: ① from the perspective of scale growth, the total assets of 22q1 listed banks increased by 8.7% year-on-year, with a year-on-year growth rate of 0.8pc higher than that at the beginning of the year, which is attributed to the power of wide credit. The growth rates of various bank assets from high to low are urban commercial banks (12.2%), rural commercial banks (9.5%), state-owned banks (8.5%) and joint-stock banks (8.1%). ② From the perspective of asset negative structure, the proportion of loans remained stable at the end of 22q1, and the proportion of deposits increased. (2) Looking forward to the future: broaden credit and steady growth. It is expected that the total assets of listed banks will maintain a rapid growth of 8.0% throughout the year.
The interest rate spread narrowed month on month. (1) Review Q1: ① on the whole, the single quarter net interest margin of 22q1 listed banks narrowed by 4bp compared with 2021q4, in line with market expectations. Under the background of downward interest rate, the decline of asset yield is greater than that of debt cost rate. ② In terms of various types of banks, the decline in interest margin from low to high is agricultural Commercial Bank (1bp), joint-stock bank (3bp), urban commercial bank (5bp) and state-owned bank (5bp). (2) Looking ahead: it is expected that the interest rate spread in 2022 will be basically the same as that in 22q1. On the one hand, the increase of deposits has decreased, and the debt cost ratio is expected to continue to improve; On the other hand, as the impact of repricing subsides and the marginal repair of retail demand, the decline of return on assets is expected to slow down.
Non interest rate growth slowed. (1) Review Q1: the year-on-year growth rate of medium income of listed banks in 22q1 slowed down by 2.8pc to 3.5% compared with 2021a, due to the weak fluctuation of capital market and consumption, and the weak growth of consignment and credit card business; The year-on-year growth rate of other non interest income decreased by 20pc to 11% compared with 2021a, due to the volatility of the bond market and the decrease of investment income.
(2) looking forward to the future: with the recovery of economy and consumption, the medium income growth rate of listed banks is expected to recover, and it is expected that the medium income will increase by 6.5% year-on-year in 2022; It is estimated that the growth rate of other non interest in 2022 will be lower than that in 2021.
The adverse was improved month on month. (1) Review Q1: ① from the overall performance, the non-performing rate of listed banks in 2022q1 decreased by 3bp compared with the beginning of the year. ② In terms of various banks, the improvement range of non-performing rate from high to low is agricultural Commercial Bank (3bp), urban commercial bank (2bp), state-owned bank (1bp) and joint-stock bank (1bp). The overdue rate and attention rate of some listed banks fluctuated slightly, which was attributed to the real estate risk and retail risk exposure under the influence of the epidemic. In terms of provision, the provision coverage rate of listed banks in 2022q1 is 7pc higher than that at the beginning of the year. (2) Looking ahead, it is expected that the impairment pressure in 2022 will be improved compared with that in 2021. Among them: it is estimated that the generation rate of non-performing loans in 2022 will be slightly higher than that in 2021, and the real risk will improve with the stabilization of the economy in the second half of the year; Non credit impairment leaves surplus grain and room for decline.
Profit forecast: fundamentals are expected to stabilize and improve
(1) annual forecast: it is estimated that the profit of listed banks in 2022 will be + 9.6% year-on-year, down from 12.6% in 2021, but higher than the compound growth rate of 6.5% in 19-21; It is estimated that the revenue in 2022 will be + 6.8% year-on-year.
(Q2) the growth rate and profit are expected to pick up quarter by quarter. On the revenue side, the drag of interest rate spread subsided, and the growth rate of medium income rebounded; On the impairment side, the pressure of non credit impairment has subsided, and there is room for the decline of credit costs.
(3) all kinds of banks: high-quality urban rural commercial banks are expected to maintain rapid growth in profits, and joint-stock banks are expected to repair. It is estimated that the net profits of state-owned banks, joint-stock banks, urban commercial banks and rural commercial banks will increase by 8.2%, 10.9%, 16.5% and 15.3% year-on-year respectively in 2022, which is + 0.9pc, + 1.5pc, + 1.0pc and + 1.7pc respectively compared with 22q1. At the same time, attention should be paid to the impact of the epidemic on small and medium-sized banks and retail businesses in some regions.
Investment advice: ride a donkey to find a horse, and the donkey will become a horse
In 2022q1, the profit was steady and higher than expected, and the bank fundamentals showed relative beauty in the period of economic downturn. With the economic recovery and epidemic control, the fundamentals are expected to stabilize and improve. Firmly optimistic about the current investment opportunities in bank stocks. If you ride a donkey and look for a horse, the donkey will change into a horse and buy a bank. Key recommendations: Industrial Bank Co.Ltd(601166) / Ping An Bank Co.Ltd(000001) / Bank Of Nanjing Co.Ltd(601009) .
Risk tip: macroeconomic stall and substantial exposure of adverse.
