After experiencing the downturn trend last year, the overall recovery trend of the stock prices of listed banks after entering 2022 is obvious. As of January 17, the banking sector had increased by 1.77% in the year, in sharp contrast to the decline of 3.65% in the whole year of last year.
The recovery of the valuation of the banking sector is inseparable from the good performance achieved last year. Up to now, 10 listed banks have published their performance letters in 2021. All the above banks achieved positive growth in profits last year, and the net profit attributable to the parent of 9 banks increased by more than 20% year-on-year.
LV Changshun, chief researcher of Shanghai Zhonghe Yingtai Financial Consulting Co., Ltd., told the Securities Daily, “the strong profit performance shown by many bank performance letters undoubtedly played a key role in improving the valuation of the banking sector in 2022.”
banking sector valuation recovery
the increase is in the forefront of Shenwan industry
According to statistics, the banking sector index in Shenwan industry rose or fell by – 3.65% in the whole year last year, which was not only much weaker than the performance of the Shanghai index in that year, but also ranked downstream among the 31 Shenwan industry indexes.
The long-term downturn in the valuation of the banking sector last year also put significant pressure on the stock prices of individual stocks of listed banks. As of the closing on December 31, 2021, among all 41 A-share listed banks, the number of banks with negative cumulative rise and fall (after restoration) in share price during the year has reached 32, and the share prices of many listed banks have broken the net. After entering 2022, the overall performance of the stock prices of listed banks bid farewell to the previous “darkest moment”. In more than half a month after the new year, the valuation of the banking sector has obviously warmed up.
As of the closing on January 17, the banking sector had increased by 1.77% during the year, ranking fifth in the Shenwan industry index. At the end of last week, the banking sector led the Shenwan industry index.
There were 41 bank shares in Shanghai and Shenzhen stock markets. During the year, the number of banks whose share prices rose reached 35, accounting for 85%. A total of 8 Banks’ cumulative share prices rose by more than 5%, and Bank Of Chengdu Co.Ltd(601838) , Bank Of Jiangsu Co.Ltd(600919) performed more strongly. The cumulative share prices of the two banks reached double digits, 13.69% and 11.65% respectively. At the same time, the average price to book ratio of listed banks has increased from 0.83 times as of the end of last year to 0.85 times at present.
In this regard, China Merchants Securities Co.Ltd(600999) Liao Zhiming, chief analyst of banking industry, told the reporter of Securities Daily that due to being excluded from the popular track last year, institutional funds flowed out of the banking sector, which affected its market performance. This year, the style of pursuing overvalued value and high growth has changed. The once popular sector is no longer popular after the new year. At present, the valuation of bank stocks has deviated from the fundamentals to a considerable extent, and there is an undervalued situation, which makes the bank sector regain favor.
10 bank performance letters appeared
all profits increased significantly
By the end of last week, the performance letters of 10 banks had been disclosed. The performance express shows that the profits of the above banks increased significantly last year, of which the net profit attributable to the parent company increased by 30.72% year-on-year. While the profit increased significantly, the asset quality of listed banks also improved significantly. The non-performing loan ratio of the 10 banks that disclosed the performance express by the end of 2021 was lower than that at the beginning of last year, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) and Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) by the end of last year, the non-performing loan ratio was lower than 1%.
Liao Zhiming said that the performance express with frequent good news indicates that the overall profitability of listed banks has maintained a good level in 2021. Among them, the performance of high-quality urban commercial banks and joint-stock banks will be more brilliant. The strong profit growth in 2021 also makes the valuation of the banking sector out of last year’s trough.
While the performance in 2021 is expected, the performance of listed banks in 2022 is expected to maintain a stable growth trend. The 2022 commercial bank operation outlook report released by the financial research center of Bank of communications pointed out that in 2022, the growth of bank profits will return to normal. It is expected that the annual net profit attributable to the parent company of listed banks will increase by about 6.5% year-on-year. In addition, with the more prudent risk appetite of commercial banks and the increase in the disposal of non-performing assets, it is expected that the overall asset quality will be stable and controllable in 2022, and the non-performing rate will remain at about 1.8%.
