Changshu Bank (601128): Vigorously Consolidate Poor Provisions to a New Low
Event: On March 4, 2019, Changshu Bank disclosed the 2018 results flash report.
In 2018, it achieved operating income of 5.8 billion yuan, an increase of 16 in ten years.
2%; net profit attributable to mothers was 150,000 yuan, an increase of 18 year-on-year.
1%, basically in line with market expectations; in the fourth quarter of 2018, the negative growth was 0.
97%, a quarter-on-quarter decrease of 3bps and a provision coverage rate of 450.
01%, a quarter-on-quarter increase of 43.
The non-performing ratio was reduced by less than 1%, and the provisions were vigorously consolidated to fully demonstrate a prudent and prudent operating style.
The non-performing rate of Changshu Bank had an inflection point as early as 2016 and then decreased quarter by quarter.
97%. This is the third bank with a non-performing ratio as low as 1% except Bank of Ningbo and Bank of Nanjing.
At the same time, according to our calculations, the non-performing generation rate of Changshu Bank’s write-backs increased by only 11bps to 72bps in 18 years, which is still at the same level as listed banks.
Therefore, whether it is the trend of marginal changes in asset quality or some overdue loan rate (1.
06%, only slightly higher than the Bank of Ningbo), non-performing identification (“more than 90 days overdue / non-performing loan” as low as 62.
2%) and other indicators of static performance, Changshu Bank has been significantly engaged in this industry.
What also needs to be seen is that in 4Q18, the bank’s provision coverage ratio of Changshu Bank increased by 124, 43 and 450%, respectively.
Even in the current economic downturn cycle, we believe that there is no historical baggage, and the prudent business philosophy of overlapping and continually consolidating provisions will still help Changshu Bank’s asset quality significantly overlap with its peers.
而对于某些部分投资者担心的小微贷款资产质量问题，减少，我们认为常熟银行长期优秀的资产质量指标已经在一定程度上转化了答案；替代，我们在2018年11月19日 日发布的The in-depth report (“Changshu Bank: Ten-Year Sword, Benchmarking Bank for Small and Micro Services”) also carried out a detailed analysis. In fact, the small and micro loan NPL ratio of Changshu Bank is even lower than the total loan NPL ratio.
Obviously, in the fourth quarter, the growth rate of the provision and pressure drop has been in line with market expectations, but even with a significant increase in provision coverage ratio of more than 40 cases, Changshu 北京夜网 Bank still maintained high profitability.
In 18 years, Changshu Bank’s net profit attributable to mothers grew at an annual rate of 18.
1%, which is expected to be the second highest level for 25 banks (excluding the newest banks listed since 2018).
From the perspective of revenue, the cumulative annual revenue growth rate on January 18, 2018 was 12 respectively.
3% and 16.
2%, about 4Q18 revenue growth has improved, we judge that it is more due to the adjustment of credit structure, has nothing to do with the credit line: increased debt growth in 18 years.
3% in the third quarter of 2018 compared with the previous growth rate (22.
7%) Sudden change in value and expansion. This is related to the common rhythm of bank credit before and after it is released; gradually, it is expected that this is to optimize the credit structure due to the strict control of risks and the continuous return to the core business.
Comparing 17-year and 1H18 retail loan structures, it is not difficult to find that 1H18 consumer loans have a significant drop of 14% month-on-month, while personal business loans have increased 27% month-on-month.
5%, the proportion of retail loans rose to 63.
4%, we judge that the expansion of consumer credit in 2H18.
At the same time, Changshu Bank’s strategic model with operating loans as its focus shifted to a high-yield feature with an interest margin (measured 3Q18: 3).
03%) In fact, it is ahead of its peers. Unless it is in the current wide currency and small and micro loan price limit, Changshu Bank is rooted in local small and micro, and the credit distribution strategy of differentiated development of personal business loans will still have the loan bargaining power of ownership.
Taking advantage of the policy and surpassing the fundamentals of excellence, we will jointly help Changshu Bank to become a huge beneficiary in the current environment of supporting small and micro-private development, and also set a reference benchmark for similar comparable banks.
Considering that Changshu Bank’s performance growth continues to be ahead of its peers, and it is deeply cultivated and small, the development model centered on personal business loans has become a fundamental advantage with high interest spreads and low non-performing, and the 18-year ROE has maintained a rising trend.Banks with proven small and micro service capabilities are the core beneficiaries of financial supply-side reforms. We will evaluate the target in January 1919.
4x PB raised to 1.
55 times, the net profit attributable to mothers is expected to increase by 18 from 2018 to 2020.
8%, 19.6% (previous forecast was 25.
2%, based on prudent attitude and high provision), currently corresponds to 19 years 1 every year.
21 times PB, corresponding to 28% of upside, maintaining the buying level.
Risk Warning: The severe economic downturn has caused bad risks for the industry.