I. Q1 industry performance overview: performance growth has returned to normal, and asset quality indicators are still improving steadily.
1. The performance growth rate returned to normal: the overall revenue, PPOP and net profit attributable to the parent of Q1 listed banks increased by 5.6%, 3.6% and 8.6% respectively, and the growth rate decreased by 2.3pc, 1.9pc and 4.0pc respectively compared with 21a. On the whole, high scale growth drives revenue growth, and less provision is made to release profits. 1) On the revenue side, under “a” and “broad credit”, the bank strongly supported the development of the real economy, increased the scale, supported the growth rate of net interest income by 5.2%, and slightly increased by 0.5pc compared with 21a (mainly due to the large-scale growth of large banks and the relatively stable interest margin, the growth rate rebounded, while the growth rate of the other three types of small and medium-sized banks decreased). B. The capital market fluctuates violently, and there is a certain pressure on the wealth management business; Consumption was weak, and the bank card business was also weak. The growth rate of net income from handling charges and commissions of listed banks in Q1 was 3.5%, down 4.7pc from 21a. C. The growth rate of other non interest income was 11.2% (investment income + profit and loss from changes in fair value + net exchange income), down 20.3pc month on month. Or mainly due to the rebound of the market interest rate in Q1 (the yield of 10-year Treasury bonds rose to more than 2.8% from the phased low of 2.68% at the beginning of the year). 2) Profit side: the provision of listed banks in Q1 was 395.8 billion yuan, a year-on-year decrease of 1% (mainly because large state-owned banks are still increasing the provision, and the three types of small and medium-sized banks are still reducing the provision to release profits), while the provision was 3.73% less last year. After the base effect disappeared, the profit growth rate returned to normal.
2. Asset quality: all indicators are still in the channel of improvement. 1) The rate of non-performing products and concern decreased steadily: it was 1.33% at the end of March, which continued to decrease by 2bps compared with the end of the previous year; Among the 32 banks that disclosed concerned loans, only 7 increased, which was related to the rising risk of some real estate customers and the impact of the epidemic on retail business, and the rest were still improving steadily. 2) Provisions continue to be consolidated. The provision coverage ratio (241%) continued to rise 3pc compared with the end of the previous year, and the provision to loan ratio (3.19%) was basically flat. Over the past 17 years, the banking industry has written off about 5.1 trillion of non-performing loans (according to the standard of Social Finance), which is close to 2.7% of the current loan scale. The cumulative disposal of non-performing assets is 12 trillion. The stock burden is continuously cleared, and the identification of non-performing loans is very strict (non-performing / overdue has exceeded 100%). At present, the asset quality of bank statements is more “clean and solid”. For high-quality listed banks, their clearing rhythm is earlier, the new risks are relatively limited, and they have the ability to resolve them through write off disposal, which is also the reason why the current risk exposure in some areas, but the performance growth rate of high-quality banks remains relatively stable.
II. Business concerns of the industry in the first quarterly report:
1. Scale: the growth rate of Q1 scale picked up, the loan was mainly supported by the public, and the retail was relatively weak. With the combination of “steady growth” and a good start, the scale of banks increased rapidly in the first quarter. At the end of the first quarter, the total assets of 42 listed banks were 237.56 trillion (accounting for about 85% of the overall industry), an increase of 4.8% over the end of the previous year, and the year-on-year growth rate rebounded to 8.7%, becoming the most important support for the performance of Q1 banks. In terms of loans, the scale increased by 4.74% over the end of the previous year, basically the same as the growth rate of total assets. Among them, the growth rates of large state-owned banks and urban commercial banks were 5.27% and 5.33% respectively. The growth rate of joint-stock banks and rural commercial banks was only 3.28% and 4.01%. Among them, urban and rural commercial banks are very differentiated, and the growth rate of banks in the Yangtze River Delta and Bank Of Chengdu Co.Ltd(601838) can reach about 7% or even higher. Structurally, from the overall perspective of 33 listed banks that disclosed detailed data, only 15% of the new credit in the first quarter was invested in retail loans, which is basically consistent with the industry trend. Q1 is generally a retail off-season, but this year is still weaker than the same period in history. In recent five years, in addition to the impact of Q1 epidemic in 2020, the proportion of new retail sales decreased to 16.5%, and the remaining years are basically more than 30%. Among them, the net decrease in retail loans of seven banks is mainly related to factors such as the weak real estate market, insufficient mortgage demand, macroeconomic downturn superimposed on the impact of the epidemic, and weak household consumption. It is expected to recover in the second half of the year. For the public, the new investment is mainly in infrastructure, manufacturing, strategic emerging industries, green finance and other fields.
In terms of deposits, at the end of March, the deposit scale of listed banks increased by 7% compared with the end of the previous year. Among them, the growth rates of large state-owned banks and urban commercial banks were 7.57% and 8.33%, which performed well, while the growth rates of joint-stock banks and rural commercial banks were only 4.77% and 6.33%.
2. Net interest margin: Q1 is still downward, mainly due to the drag on the asset side. Among the 22 listed banks that disclosed the interest margin, the net interest margin of 14 banks is still lower than that of 21a, and one is flat, which is basically consistent with the data trend measured according to the caliber at the beginning and end of the period. It is expected that the decline of interest margin is mainly dragged down by the decline of asset side yield. The influencing factors include: LPR down adjustment, loans are still repricing, weak demand for high-yield retail loans When the overall credit demand is weak, low-yield short-term loans and bills account for more, and so on. The banks with increased interest margin (China Construction Bank, China Merchants Bank, Ping An, Ningbo, Changshu, Jiangyin and Zijin) are mainly driven by the optimization of asset negative structure to stabilize the loan interest rate, effectively control the debt cost and turn ABS back to one-time factors. Looking forward to the next 22 years, although there is downward pressure on the net interest margin, there are still positive factors, such as the reduction of reserve requirement, the reform of deposit self-discipline pricing mechanism, the regulation encourages some small and medium-sized banks to increase the floating deposit interest rate, and the upper limit is reduced by about 10bps. The decline range is expected to be relatively limited.
3. Asset quality: bad real estate is still improving; Under the influence of the epidemic, credit cards and other fields fluctuated.
1) real estate: since the second half of last year, the industry risk has been gradually exposed. By 22q1, the non-performing rate of the real estate industry is still increasing. Taking China Merchants Bank Co.Ltd(600036) and Ping An Bank Co.Ltd(000001) as examples, the non-performing rates of public real estate in the table were 2.57% and 0.45% respectively, an increase of 1.18pc and 0.23pc compared with the end of the previous year. In terms of scale, it has been actively controlling relevant exposures. At the end of March, the full-scale corporate scale of the two banks (real and contingent credit, bond investment, non-standard investment, etc.) was 517.5 billion yuan and 345.5 billion yuan respectively, an increase of only about 1% over the end of the previous year, accounting for 5.5% and 6.75% of the total assets respectively, down from the end of the previous year. The two banks are reducing the business scale that does not bear credit risk (financial capital contribution, entrusted loan, consignment trust actively managed by cooperative institutions, lead underwriting debt financing instruments, etc.) to 378.4 billion yuan and 119.9 billion yuan respectively, accounting for 4.02% and 2.34% of total assets. According to the performance meeting of China Merchants Bank, it is expected that the industrial risks will still be gradually exposed, and the probability will peak this year. However, considering that the real estate loan allocation ratio has increased to more than 10% at the end of March, 2pc higher than that at the end of last year, which is more than twice that of the whole bank. The overall provision pool (credit + non credit) exceeds 300 billion, and the provision coverage rate exceeds 460%. The company has very strong risk resistance.
2) retail (credit cards, etc.): this year, the epidemic in China has spread in many places, which has a great impact on self-employed businesses and residents’ employment and income. The risk of retail, especially credit cards, has increased periodically. Taking China Merchants Bank Co.Ltd(600036) as an example, the non-performing rate of credit card in the first quarter increased by 7bps to 1.72% compared with the end of the previous year. In addition to the impact of the epidemic, there are also the impact of policies such as adjusting the time point of overdue recognition and reducing the non-performing rate of loans overdue for more than 60 days.
However, referring to 2020, the impact of the epidemic is expected to be only a short-term impact. The non-performing rate of 20q1 China Merchants Bank Co.Ltd(600036) credit card increased to a phased high of 1.89%, and then gradually decreased. At present, the entry reminder index, down migration rate and rolling rate of China Merchants Bank are relatively stable. In the past two years, not only China Merchants Bank, but also other banks are trying to adjust the development ideas of credit card business, such as improving consumption scenarios, increasing the cultivation of high-quality customer groups (such as customer quality rising to younger and high-income groups), and increasing the release of order products such as car installments. Of course, the impact of the epidemic exists, and the follow-up may further improve the generation of adverse effects. However, considering that the credit card customer base, business structure and risk control model have been further optimized, it is expected that the impact of credit cards in 2022 will be better than that in 2020.
4. Wealth management: the fluctuation of capital market has a certain impact on fund consignment and other businesses, but deposits and financial management form a good support, and the diversified structure brings some toughness. In the first quarter, a total of seven banks that disclosed AUM data achieved steady growth. Among them, China Merchants Bank Co.Ltd(600036) in the case of a large base, AUM continued to grow steadily by 5.39% to 11.34 trillion yuan Bank Of Nanjing Co.Ltd(601009) and Bank Of Hangzhou Co.Ltd(600926) had the highest growth rate, with an increase of 7.94% and 7.68% over the end of the previous year. The volume was also relatively small, only about 500600 billion. Structurally, most of the incremental contributions of banks are mainly deposit contributions, and the increment of Postal Savings Bank Of China Co.Ltd(601658) , China Minsheng Banking Corp.Ltd(600016) , Bank of Nanjing deposit scale accounts for more than 80% of AUM increment Bank Of Hangzhou Co.Ltd(600926) financial management increment contributes more to AUM increment than deposit, and financial management develops well China Citic Bank Corporation Limited(601998) financial management and deposit size have almost the same incremental contribution, both at a good level. However, due to the intensified fluctuations in the capital market, the scale of non monetary public funds held by most banks decreased net compared with the end of the previous year, becoming a drag. Bank Of Nanjing Co.Ltd(601009) and Bank Of Hangzhou Co.Ltd(600926) started late and their scale was relatively low (16 billion and 47.2 billion). With the promotion of wealth management business, the guaranteed volume of funds increased, which is better than that of the same industry. It is worth noting that the deposit + wealth management increment of China Merchants Bank Co.Ltd(600036) and Ping An Bank Co.Ltd(000001) accounts for only 32.2% and 43.5% of AUM increment, while the holding scale of the fund decreases net. It is expected that other incremental contributions include other bank wealth management sold on a commission basis, insurance sold on a commission basis, stock market value of third-party depository, etc. the diversified structure makes the two AuMS still have strong resilience, and AUM scale growth is more than 5%.
III. which banks will have sustainable high growth performance in the future?
Large state-owned banks – Postal Savings Bank Of China Co.Ltd(601658) : 22q1 revenue, PPOP and profit increased by 10.1%, 10.5% and 17.8% respectively, far exceeding market expectations. Looking forward to 2022, it is still expected to continue to improve.
1. Internal management: the incentive mechanism is more market-oriented and the system intensive reform is continuously promoted. In the 21st year, the head office and branches established an assessment mechanism linked to performance and incentive, optimized the dual channel of “management + specialty”, provided a broad career development platform for employees, and built a two-level operation center system with total score. In the next 22 years, we will accelerate the centralized approval of retail credit and centralized post loan management, as well as the centralized operation of counter, anti money laundering and finance, and centralize operation and management to the back office. We will continue to promote the open selection, tenure system and contractual management of cadres and talents, and improve the market-oriented selection and employment mechanism. With the continuous promotion of intensive reform, it is conducive to further improve business efficiency.
A. business level: there is still room to improve the proportion of assets. At present, the proportion of loans has increased to nearly 50%, and the deposit loan ratio has steadily increased to 57.1%. Compared with large state-owned banks, there is still much room for improvement. Structural optimization will help to maintain a relatively stable interest margin; B. There is still room for development of Zhongshou: high-end retail customers continued to grow rapidly (in the first quarter, VIP customers (AUM 100000) increased by 6% to nearly 45 million, and wealth customers (AUM 500000) increased by 9% to 3.88 million), which is conducive to the promotion of wealth management business; The expansion of corporate customers (at the end of March, the total number of corporate customers exceeded 1.2 million, an increase of 5% over the beginning of the year; the target customer group is mainly medium and large customers with a financing amount of 1-10 billion), which contributes to the income growth of investment banks, trading banks and so on. In the past three years, the average annual growth rate of the company’s net income from handling fees and commissions has been as high as 24%, and the proportion in revenue has steadily increased to 10.7%. However, there is still a 6pc gap compared with large state-owned banks, and there is still room for improvement in the future.
3. The agency fee is expected to be lowered to reduce costs: considering that the overall net interest margin of the four major banks of 21a has been lower than 1.87%, which meets the conditions for adjusting the savings agency rate, the next revision process can be started within 6 months. If the rate can be reduced in the future, it may help to further reduce costs and increase benefits.
City Commercial Bank – Bank Of Ningbo Co.Ltd(002142) , Bank Of Chengdu Co.Ltd(601838) , Bank Of Nanjing Co.Ltd(601009) , Bank Of Hangzhou Co.Ltd(600926)
The revenue and profit growth of the four banks exceeded 15% and 20%, leading the industry.
1. Bank Of Ningbo Co.Ltd(002142) : revenue growth is expected to increase. 1) Loans maintained high growth: Q1 loans increased by 7.8%, with a year-on-year growth rate of more than 26%. It is conservatively assumed that the annual new credit volume is the same as last year, and the annual loan growth rate is still more than 20%. 2) The difference in the delivery rhythm of Q1 deposits and loans has brought short-term “disturbance” and is expected to continue to release income in the future: on the basis of an increase of 20 billion in 22q1 loans year-on-year, the deposit has made a record start (+ 23%), and its surplus deposit, as the subject of “cash and deposit with the central bank”, has increased by 80 billion over the beginning of the year. According to the statement, the comprehensive rate of return is only 1.36%, which is lower than its capital cost (2.13%), which is equivalent to a “temporary loss”. With the steady launch of follow-up assets (the yield of interest bearing assets is 4.59%), the income will be gradually reflected. It is roughly estimated that after all the launch, the revenue growth rate can be increased to 20.3%. 3) The base effect of fund consignment gradually decreases: Bank Of Ningbo Co.Ltd(002142) consignment funds are mainly equity funds (stocks + hybrid). According to wind data statistics, 930 billion equity funds were issued in the whole market in 21q1, while 3500 / 5000 / 290 billion yuan in q2-q4 respectively. This year’s Q1 capital market fluctuated violently and the issuance of equity funds was pre cooled, which superimposed the high base of Q1 last year, which dragged down the performance of wealth management income. In the future, as the base subsided, the growth rate of wealth management business income will improve. 4) New performance growth points: in the past few years, the company has basically achieved full coverage of business areas in Zhejiang Province and the sinking of business outlets outside the province. In the next 22 years, the company will continue to explore the construction of diversified profit centers and cultivate new profit growth points. Including the consumer finance subsidiary acquired last year, which can be developed nationwide; And in April, the board of directors announced the establishment of the big data business department of the retail company of the head office. It is expected that a certain increment will be formed in consumer finance, retail companies and other businesses in the future.
2. Bank Of Chengdu Co.Ltd(601838) , Bank Of Nanjing Co.Ltd(601009) and Bank Of Hangzhou Co.Ltd(600926) : the three banks are expected to continue to benefit from the high growth of infrastructure. 1) High scale growth is expected to continue: the proportion of infrastructure loans of the three banks is about 35% or more ( Bank Of Chengdu Co.Ltd(601838) more than 43%), and the growth rate of loans in the first quarter of this year was 33%, 18% and 21% respectively year-on-year. Among them, Bank Of Chengdu Co.Ltd(601838) benefiting from the strong demand brought by the development of Chengdu Chongqing economic circle, the loan growth rate exceeded 37% in 21 years. Conservatively assuming that the credit increment remains unchanged this year, the loan growth rate will still exceed 27%, much higher than that of the same industry Bank Of Nanjing Co.Ltd(601009) benefiting from the strong regional economic momentum (according to the planning of Jiangsu Province, 2180 projects with more than 100 million yuan were started in Q1, an increase of 714 over the previous year, and the annual planned investment was 572 billion yuan, an increase of 134.3 billion yuan over the previous year) and its network expansion strategy, Q1 deposits and loans increased by more than 10%, while the newly established 15 sub branches in 2021 accounted for 1 / 4 and 11.5% of the bank’s new loans and deposits respectively. The company expects to open 47 sub branches in 22 years, It is expected to further support the growth of deposits and loans. 2) Net interest margin: the rhythm of each bank is different, and the base may fluctuate the growth trend of net interest income. For example, the Bank Of Nanjing Co.Ltd(601009) 21q1 net interest margin of the disclosed data is a phased high (1.98%), and then decreases quarterly. Q1 net interest margin (1.85%) fell year-on-year this year
