Calculation of the impact of LPR and MLF downward on the bank’s net interest margin and pre tax profit in 2022. The winning interest rate of MLF this week was 2.85%, down 10 basis points; The latest LPR quotation, 1-year LPR and 5-year LPR decreased by 10 / 5 basis points respectively compared with the previous month. It is estimated that the overall net interest margin of the bank in 2022 will be dragged down by 0.44bp and the pre tax profit by 0.4 percentage points. 2. The net interest margin between sectors shows differentiation. The net interest margin pressure of joint-stock banks and urban commercial banks with high proportion of non mortgage retail credit and high proportion of wholesale funds is less than that of other sectors. 3. At present, the restriction on bank valuation is more worried about the economic downturn and insufficient credit demand. The policy is loose to support the economy, and the fundamentals of the sector are expected to be better.
Asset side: in the first three weeks of 2022, the net financing of local bonds and government bonds widened, with a total net financing of 261.7 billion, an increase of 46.7 billion over the same period last year; Net financing of government bonds and local bonds increased slightly. In the first three weeks of January 2022, the net financing of local bonds was 234.7 billion, an increase of 22.2 billion over the same period last year, with a similar rhythm compared with December 21; The net financing of treasury bonds was 27 billion, 24.5 billion higher than the same period last year. In 2022, the financing volume of local bonds has increased and the issuance rhythm has accelerated. Next week, local bonds are expected to issue 402.149 billion yuan, far exceeding that of the same period last year and December. At present, a total of 21 provinces and cities have disclosed the local bond issuance plan from January to March, with a total disclosure of 1232.4 billion yuan. 2. Liability side: in the third week of January, the net financing differentiation of interbank certificates of deposit was significant, its Chinese stock banks showed net repayment, and urban rural commercial banks were the main support of the financing amount. In the third week of January, state-owned banks and joint-stock banks continued their net repayment, while the net financing amount of interbank certificates of deposit of urban commercial banks and rural commercial banks was positive.
Price: monetary policy moves forward, and interest rates at the negative end of assets are down. 1. Asset side: monetary policy tracking: since January, the open market operation has recovered some funds, and the interest rate has been reduced to a certain extent. On December 15, 2001, the RRR reduction released nearly 1.2 trillion funds, with loose liquidity at the beginning of the month, and the open market operation returned 660 billion in the first week of January. In the third week, the net investment was 450 billion yuan, and an additional 200 billion yuan was invested after the expiration of MLF, so as to maintain the overall reasonable and abundant liquidity. In terms of interest rate, the bid winning interest rates of MLF and Omo decreased by 10bp this week, and SLF also decreased by 10bp. This week, the central bank’s open market showed large-scale operation. From the statement of the press conference on financial statistics held by the central bank, it can be seen that the central bank will be more active at the policy level, and clearly put forward “full force, accurate force and forward force”. For the follow-up monetary policy, it is expected that the central bank will continue to make efforts to stabilize expectations, confidence and credit. 2. Debt side: the cost of active debt capital decreased. The capital cost of active liabilities of large banks and small and medium-sized banks decreased to varying degrees compared with last week.
Credit risk: in the first three weeks of January, there were 3 cases of credit debt default, mainly private enterprises. The industry is chemical industry and real estate development, with a total scale of 1 billion. The number of debt defaults showed a downward trend, but the number and amount of relevant credit debt defaults of real estate enterprises rebounded due to the tight financing environment. However, considering the marginal relaxation of the financing policy for real estate enterprises since November, and the current policy emphasizes that there is still room for monetary and fiscal policy under the expectation of “stable growth”, we judge that the current credit market risk will be significantly repaired compared with the previous period. There is no large credit risk as a whole, but individual regions and enterprises will be exposed to individual risks.
Investment suggestion: at present, the safety margin of the sector is relatively high, and the asset quality constructs the safety margin of bank shares. 1. The core investment logic of bank stocks is macroeconomic. For details, see our relevant in-depth report “how do bank stocks perform when prices rise? – summary and comparison of multiple rounds of performance of bank stocks in China and the United States”. We expect that the asset quality of listed banks will be stable in the next few years, which will build the safety margin of bank shares. 2. Banks have two main lines of stock selection. One is our long-term proposal to continue to embrace the core assets of banks: China Merchants Bank Co.Ltd(600036) , Bank Of Ningbo Co.Ltd(002142) , Ping An Bank Co.Ltd(000001) . Their performance is highly sustainable and scarce. The boom of high-quality banks is certain and long-term. First, these scarce high-quality banks have “market-oriented genes” and “run to make money” in the industry of “lying down to make money”; Therefore, in the era of banking differentiation, their growth can be valued sustainably. Second, these banks occupy the sunrise track of the financial industry: wealth management and retail; Our in-depth report estimates that the growth rate of wealth management profits in the next decade will be 21% (see detailed calculation of income, profit and market value of “wealth management industry”: the golden track with a market value of 10 trillion). The other is to choose banks with undervalued value, safe asset quality and expected successful transformation, and be optimistic about Postal Savings Bank Of China Co.Ltd(601658) , Bank Of Jiangsu Co.Ltd(600919) , Bank Of Nanjing Co.Ltd(601009) and Industrial Bank Co.Ltd(601166) .
Risk warning event: the economic downturn exceeded expectations. The impact of the epidemic exceeded expectations.
