Industrial and Commercial Bank of China (601398): Solid asset quality, optimistic about its continued competitiveness, continue to recommend H shares

Investment Highlights Quarterly Highlights: 1. The asset quality continued to improve, and the net generation of non-performing annualization in the single quarter continued to decrease and remained low. The third quarter decreased by 6bp to 0.


The non-performing rate has been declining since 3Q16 and is 1.

44%, a decrease of 4bp from the previous month and a double decrease from the bad.

2. Good cost control.

The annualized cost and revenue in a single quarter decreased by 27bp to 24 compared with the same period last year.


Business management fees increase by 6 per year.


3. The growth rate of net budget fee income maintained an annual growth rate close to two figures, +9 per year.

6% (1H19 decade +11.


The number of effective customers and financial transactions in the first three quarters of the company increased significantly, driving revenue.

  Insufficient quarterly reports: 1. The interest margin is generally stable, and the interest rate on deposits is expected to increase.

The calculated net interest margin was flat month-on-month, and the cumulative daily average net interest margin disclosed by 淡水桑拿网 the company fell 3bp to 2 from half a year.


The interest rate on the debt side increased by 5bp month-on-month. From a structural point of view, the proportion of deposits and active compensation was stable, and it is expected that the pressure of sedimentation competition will continue.

  Investment advice: The logic of large-scale asset shortages supports ICBC’s estimates, especially its H shares.

Company 2019E, 2020E PB 0.

86X / 0.

79X; PE 6.

99X / 6.

68X (original bank PB0.

76X / 0.

69X; PE 6.

44X / 6.

16X), ICBC’s fundamentals are stable and solid, asset quality is optimized and consolidated, profitability has increased steadily and high, and recognition is excellent. In recent years, it has increased investment in science and technology to create a first-class comprehensive financial control platform. We are optimistic about its continued competitiveness and highThe moat is a bank that we continue to recommend.

  Pay attention to the medium and long-term investment opportunities of Chinese banks in Hong Kong stocks, especially ICBC H shares and CCB H shares. The logic is: 1. The valuation of Hong Kong stock Chinese banks is at the bottom of history (IC Bank H shares PB at 0.

67X, China Construction Bank H shares PB at 0.

70X), the dividend yield is at a historically high position (the current Industrial and Commercial Bank of China H-share dividend yield is 5).

12%, CCB H-share dividend yield is 5.

55%), the future of domestic large-scale funds face the “asset shortage”; 2, the market is worried about the bank giving profits to the real economy, we judge that the profit margin is limited;And legal aid.

  Risk reminder: The macro economy is facing downward pressure, and performance management is less than expected.