China CITIC Bank (601998): Retailing continues to strengthen the quality 天津夜网 of its assets
Key points of investment: CITIC Bank announced its 18-year annual report, and its net profit in 2018 increased by 4 in ten years.
Operating income grows by 5 per year.
20%, net interest income increased by 5 in ten years.
15%, net fee income is reduced by 3 per year.
Total assets are 60,667.
1.4 billion (+6.
85% year-on-year), of which the loan +12.
87% year-on-year; deposit +6.
13% over the same period last year.
Net interest margin is 1.
94% (+ 15bps, year-on-year); NPL ratio 1.
77% (-2bps, QoQ); loan-to-loan ratio 2.
80% (-4bps, year-on-year), provision coverage ratio of 157.
97pct, QoQ); ROE11.
28pct, year-on-year), ROA0.
03pct, YoY); capital adequacy ratio 12.
47% (+ 82bps, year-on-year).
Initial cash dividend 0.
23 yuan, cash dividend ratio of 26.
Ping An’s point of view: The growth rate of 18-year performance has clearly rebounded, and the spread is the largest contribution factor. The company’s 2018 performance growth rate went up, and the revenue, pre-provision profit and net profit growth were 5 respectively.
57%, an increase of 3.
34 points, 3.
The 18-year ROAA and ROAE were 0.
77% and 11.
39%, ROAA rose by 0 in advance.
03pct, ROAE is often lower than lower but the decrease is narrowed, and profitability is repaired.
Performance attribution: 1) The negative change in the spread of interest spread becomes positive, which is the largest positive contribution factor for profit in 18 years. The rise in credit volume and price support the spread; 2) The negative contribution of fee income.
28%, but it has improved compared with the first three quarters, and other non-interest income is contributing significantly; 3) The positive contribution of the provision ratio has slightly increased.
Operational highlights: 1) The business foundation has been further consolidated, the customer base has been emphasized, and the risk has been strictly confirmed.
The rapid accumulation of customers has led to the growth of business scale, and the credit card business has grown significantly. In the 18 years of retail business revenue, the contribution of non-interest net income reached 35.
53%; one-time indigestion scissors are inferior, it is considered more prudent, and the potential risks of long-term operations are mitigated.
2) New force for corporate business: deepening transformation, developing advantages and focusing on features.
Corporate business is still the company’s business body, with a solid foundation for the public customer base, and the “five general models” of strategic customers has landed. At the same time, business features in cross-border, custody, blockchain business, and group linkage have begun to emerge.
3) Adhering to regional differentiated development in business strategy, the contribution of strategic branches has steadily increased.
Divide into strategic fulcrum branches, key regional banks, and potential regional banks for credit allocation, product pricing, review and approval, and deployment of scientific and technological manpower.
Strategic fulcrum is the focus of budget. While some indicators are tilted towards it, business contribution has also been effectively improved.
Financial analysis: 1) The growth rate of PPOP returned to the upward channel, and the growth rate of net interest income in Q4 increased significantly.
The 18-year net interest income will increase by 5 per year.
15%, good performance stems from the adjustment of asset structure and wide net interest margin.
Q4 single-quarter net interest rate income grew by 10.
01%, the highest in 16 years.
2) After shrinking the table and adjusting the structure, it entered a stable growth channel, and the asset side allocated high-yield assets.
Assets in 18 years increased by 6 over 17 years.
85%, formally ended the progress of the reduction.
The business returned to traditional credit, and net loans and investment assets increased by 13 at the end of 17 years earlier.
2% and 8.
13%, accounting for 57 of the assets.
3) The asset-side pricing power has improved, and the debt-side has benefited from loose liquidity, and the expected interest margin has widened by 15BP.
The 18-year interest margin has increased quarter by quarter, but the pace of repair has slowed down. We believe that it is mainly due to the ample market liquidity in the second half of the year, which has eased the pressure on the resistance side. At the same time, it is difficult for bank asset-side pricing to improve in a wide credit environment.
4) Asset quality: Asset quality continued to solidify, and retail business credit costs rose.
The NPL ratio in 2018 was 1.
77%, a year up 0.
09pct, but down quarter-on-quarter.
Strengthen the exposure and treatment of risks, and reduce the degree of bad substitution16 from 17 years.
97pct to 92.
Looking at the fundamentals of investment advice, the overall performance of CITIC Bank in terms of growth rate and quality has improved significantly. PPOP has bottomed out, and its revenue growth rate has continued to exceed the profit growth rate. More importantly, the asset quality has become more solid and unsatisfactory.The scissors difference continued to decline.
In the future, it is necessary to pay attention to the trend of asset quality changes in the retail business.
In terms of operations, the company’s strategy is steadily advancing at the same time, the retail transformation continues to develop continuously, the customer base is consolidated, and the retail business contribution has increased. At the same time, regional development strategies have also been effectively implemented, focusing on corporate business, and the two-wing transformation has been rolled out.
According to the results announced in the company’s annual report, and considering the pressure on the future company’s interest margin from a series of policies of the regulatory agencies on financing structure and cost, we have slightly lowered the company’s profit forecast. The forecast for net profit growth in 19/20 is 4.
1% / 3.
8% (was 5).
0% / 4.
Since the market has recovered since 19 years, the company’s PB (LF) has risen to zero.
About 75 times, it is estimated that the repair amounted to 9.
3%, but the overall estimated premium is still low.
At present, the total corresponding 19/20 PB is 0.
68x / 0.
57x, PE is 6.
62x / 6.
37x, maintain the company’s “recommended” rating.
Risk Tips 1) Asset quality is affected by economic expectations that exceed expectations, and credit risk is exposed centrally.
The banking industry is closely related to the national macroeconomic development, and its asset quality is even more affected by the overall macroeconomic development growth rate and quality.
If the macro-economy exceeds expectations, it will inevitably cause the industry’s overall asset quality pressure and affect the disposal and recovery of non-performing assets, thereby affecting the company’s profit growth rate.
2) The policy budget is stronger than expected.
Under the background of deleveraging and risk prevention, the breadth and depth of industry supervision have been continuously strengthened, and similar policies and regulatory plans such as new asset management regulations have been introduced.The company’s operating stability caused adverse effects.
3) Systemic risks arise from market decline.
Bank stocks are an important component of large-cap stocks, and their overall rise and fall are closely related to market investment style.
If the overall market systemic risk declines, it may drive the industry to reduce the decline, thereby affecting the company’s performance.