On January 17, the central bank launched the operation of MLF of 700 billion yuan and Omo of 100 billion yuan. The interest rates of MLF and Omo decreased 10bp to 2.85% and 2.10% compared with the previous period.
The interest rate cut is in line with market expectations and exceeds market expectations. Pay attention to LPR quotation. The interest rate cut means that the steady growth policy is overweight, combined with the wide credit at the beginning of the year. At the same time, MLF continues to stabilize the liquidity environment in January. The interest rate cut will help ease the cost pressure on the bank’s liability side, promote the downward transmission of the enterprise’s comprehensive financing cost, and protect the bank interest margin. It is suggested to pay attention to the changes of LPR quotation in the future, and the follow-up real estate and steady growth policies are expected to continue to pick up.
This year, the main impact of bank stocks will still focus on economic and real estate fundamentals, steady growth and real estate policies. Since January, the expansion of the epidemic and weak economic data have strengthened concerns about the insufficient effectiveness of the economy and steady growth, affecting the performance of the industry. However, there is still room and power at the level of steady growth and real estate policies, and pessimistic expectations may be gradually revised. It is expected that in the expected alternating changes of economy and policy at this stage, the industry may fluctuate upward. In terms of individual stocks, it is recommended to pay attention to regional banks with rapid performance growth, such as Bank Of Hangzhou Co.Ltd(600926) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Bank Of Jiangsu Co.Ltd(600919) , and continuous recommendation of core targets: Bank Of Ningbo Co.Ltd(002142) , China Merchants Bank Co.Ltd(600036) , Postal Savings Bank Of China Co.Ltd(601658) .
MLF and Omo interest rates were lowered, and the steady growth policy was overweight
The reduction of MLF and Omo interest rates is in line with market loose expectations, but the reduction range (10bp) is higher than market expectations. We believe that the steady growth policy will focus on economic fluctuations. Under the pressure of China’s economic structural transformation and the epidemic situation at the end of the year, the steady growth policy will continue to increase. Following the RRR reduction in December 2021 and the 1-year LPR interest rate reduction, the interest rate reduction of MLF and Omo may be intended to promote the transmission of “wide money – wide credit”. In addition, the excess continuation of MLF also helped to stabilize the capital fluctuation in January.
Ease the cost pressure on the liability side of banks, unblock the transmission mechanism and reduce the comprehensive financing cost of enterprises
The market is worried about the bank’s continuous profit transfer in 2022, but we believe that in combination with the bank’s historically low interest margin and regulatory statements, we will pay more attention to the transmission of “reducing debt cost – asset side interest rate downward”. From the current level of interbank certificates of deposit and MLF, the yield to maturity of one-year AAA interbank certificates of deposit is 2.61%, which is lower than the MLF interest rate. The reduction of MLF interest rate helps to guide the decline of the bank’s liability side cost rate and alleviate the cost pressure, so as to realize the transmission to the asset side interest rate.
Pay attention to LPR quotation and grasp the main line of steady growth
After the market interest rate reform, MLF interest rate has become the basis for LPR pricing. It is recommended to pay attention to the No. 20 LPR quotation, especially the 5-year LPR quotation. We believe that whether the LPR quotation is lower or not, the interest rate cut has transmitted a positive signal of steady growth, which is conducive to the banking business environment and asset allocation demand in 2022, and continues to be optimistic about the repair of undervalued banking sector.
Risk warning: large-scale outbreak of real estate default risk; The economy fell sharply, exceeding expectations
