Original title: Double-digit growth!The first quarterly reports of many banks are eye-catching, and “steady growth” helps restore valuations
On the evening of April 26, Bank of Ningbo, Bank of Suzhou, and Ping An Bank released their first-quarter 2022 reports, respectively. Net profit in the first quarter increased by 20.80%, 20.56%, and 26.83% year-on-year, respectively. Prior to this, Bank of Nanjing, Zhangjiagang Bank, China Merchants Bank, Changshu Bank, Zheshang Bank and Hangzhou Bank successively released their first-quarter results, with net profit growth rates of 22.33%, 29.74%, 12.52%, 23.38%, and 11.84% respectively , 31.39%, both maintained double-digit growth rates.
As far as the overall situation of listed banks is concerned, some analysts predict that double-digit growth in net profit has become one of the main trends, and asset quality has generally remained stable. Looking forward to the second quarter, many banking industry analysts believe that the policy of stabilizing growth is good for the banking industry. In the second quarter, the synergy of multi-party policies is expected to improve physical demand and benefit the banking sector.
Net profit maintains double-digit growth
Judging from the listed banks that have disclosed their first quarterly reports for 2022, the double-digit growth in net profit attributable to shareholders of listed companies has become a highlight. Especially for some city commercial banks, the growth rate of net profit exceeds 20% or even 30%.
Specifically, in the first quarter of this year, among city commercial banks and rural commercial banks, Nanjing Bank achieved a net profit of 5.015 billion yuan, a year-on-year increase of 22.33%; Hangzhou Bank achieved a net profit of 3.309 billion yuan, a year-on-year increase of 31.39%; Changshu Bank achieved a net profit of 6.59% RMB 100 million, a year-on-year increase of 23.38%; Bank of Ningbo achieved a net profit of RMB 5.72 billion, a year-on-year increase of 20.80%.
Among the joint-stock banks, China Merchants Bank and Ping An Bank also had double-digit growth in net profit. In the first quarter of this year, China Merchants Bank achieved a net profit of 36.022 billion yuan, a year-on-year increase of 12.52%; Ping An Bank achieved a net profit of 12.85 billion yuan, a year-on-year increase of 26.8%.
“It is expected that in the first quarter of this year, the overall performance of listed banks will still maintain growth, and the growth rate of revenue and profit may be ‘stable and slightly lower’ compared to last year, but it is still at a high level.” A banking analyst said.
Asset quality remains stable
Judging from the listed banks that have disclosed the first quarterly report, the asset quality remains stable, and the non-performing indicators show the characteristics of stability and improvement. Most banks’ NPL ratios were flat or down compared to late last year/early this year. For example, as of the end of the first quarter of this year, the NPL ratio of Bank of Nanjing was 0.90%, down 0.01 percentage points from the beginning of the year; the NPL ratio of Bank of Hangzhou was 0.82%, down 0.04 percentage points from the end of the previous year; the NPL ratio of Bank of Ningbo was 0.77%, down from 0.77% at the beginning of the year. The non-performing loan ratio of Changshu Bank was 0.81%, and the non-performing loan ratio of Zheshang Bank was 1.53%, both unchanged from the end of last year.
The non-performing loan ratio of individual banks has risen, but to a lesser extent. For example, the non-performing loan ratio of China Merchants Bank was 0.94%, an increase of 0.03 percentage points from the end of the previous year. China Merchants Bank said that the company will closely track changes in the macro situation, continue to adjust customer structure and credit structure, strengthen risk monitoring and early warning in key areas such as real estate, local government credit, and large group customers, formulate targeted management and control plans, and strengthen Pay attention to and overdue loan management, effectively prevent, resolve and dispose of potential risks, fully make provision, take multiple measures to increase the disposal of non-performing assets, and strive to maintain the overall stability of asset quality.
The impact of the epidemic is generally controllable
On April 18, in response to the impact of the epidemic in Jiangsu, Zhejiang and Shanghai on banks’ credit issuance and asset quality in the second quarter since March, Zhuang Lingjun, president of Bank of Ningbo, said, “The epidemic has had a certain impact on our daily operations, but from recent market research, From the perspective of customer communication and other situations, the overall situation is controllable.”
Regarding whether the demand for credit and the issuance of credit have been affected by the epidemic, Bank of Suzhou said in early April that the impact of the epidemic on recent credit issuance is mainly reflected in personal housing loans and consumer loans. Affected by epidemic prevention and control policies such as reducing unnecessary movement of people and home isolation, the opening of new real estate properties has been delayed, second-hand housing transactions have been relatively cold, and consumer markets such as tourism, entertainment, accommodation and catering have also been affected to some extent. However, due to the delayed issuance of some early credit needs, the bank’s recent credit demand and issuance were generally good, and were not significantly affected by the epidemic.
Ruifeng Bank emphasized that since the outbreak of the epidemic, the bank has carried out irregular inspections on key industries and customers, and issued early warnings in a timely manner, and continuously strengthened asset quality management and control measures. It is expected that the overall asset quality will continue to improve in the future. On the whole, East China regional banks believe that the epidemic has limited impact on bank asset quality. “The impact of the epidemic since March may cause some banks to generate non-performing loans and some fluctuations in the leading indicators of non-performing retailers at the retail end, but it is expected that the overall asset quality of listed banks will remain stable and improving.” Zheng Qingming, an analyst at Shenwan Hongyuan, judged.
“Stable growth” is good for the banking industry
Some industry analysts predict that the overall financing environment will be stable and slightly wider in the second quarter, the credit structure of the banking industry will continue to be optimized, and market interest rates are expected to remain stable with some declines, further reducing the financing costs of the real economy. With the adjustment of credit and deposit structure by banks and the release of market risks, the performance of banks in the first half of the year may still maintain steady growth, but it is very likely that it will be difficult to maintain the net profit growth rate of 20% to 30% of listed banks in the same period last year.
A few days ago, Wang Yiming, a member of the Monetary Policy Committee of the People’s Bank of China and former deputy director of the Development Research Center of the State Council, said that the economy is still facing greater downward pressure in the second quarter. Stabilizing the macroeconomic market is a top priority, and stronger policy measures must be taken to ensure the economy in the second quarter. The growth rate returned to more than 5%, laying the foundation for achieving the expected economic growth target for the whole year.
In the view of Lin Jiali, an analyst at Haitong International Securities, banks are the “intersection” of industries that benefit from various growth-stabilizing policies. Whether it is changes in monetary policy, fine-tuning in the field of infrastructure and real estate, or policies to stabilize growth in some specific real industries, they will all be implemented into the fundamentals of the banking industry. In other words, the policy of stabilizing growth is good for the banking industry. Looking forward to the second quarter, Zheng Qingming said that it is currently in the transitional stage of “relaxing credit and stable growth”. In the second quarter, the joint efforts of various policies are expected to improve physical demand, which will benefit the valuation of the banking sector. At the same time, from the perspective of bank fundamentals, the impact of the epidemic on asset quality is limited, and high-quality banks will remain stable and outperform their peers.