Securities Times reporter Du Xiaotong Li Yingchao
At present, the third quarterly reports of 42 A-share listed banks in 2022 have been released. Benefiting from the recovery of credit demand and the continuous improvement of asset quality, listed banks generally achieved a month-on-month increase in profit growth, showing relatively strong performance certainty.
Securities Times reporters found that in the first three quarters of this year, among the 42 A-share listed banks, only 3 banks had a year-on-year negative growth in net profit, and another 13 banks achieved a year-on-year increase in net profit of over 20%. It is worth mentioning that as the A-share listed banks generally achieved an increase in the growth rate of net profit in the third quarter, the average growth rate of net profit in the first three quarters increased by 0.5 percentage points from the first half of the year.
34 companies’ revenue and net profit doubled
In the first three quarters of this year, 34 of the 42 A-share listed banks achieved year-on-year growth in both operating income and net profit attributable to the parent. Among them, 20 banks have a double-digit net profit growth rate, and 4 urban and rural commercial banks, including Hangzhou Bank, Chengdu Bank, Jiangsu Bank, and Zhangjiagang Bank, have a net profit growth rate of even more than 30%.
Among the six major state-owned banks, except for ICBC, all other major banks achieved positive year-on-year growth in operating income in the first three quarters; in terms of profit scale, ICBC ranked first, with a net profit attributable to the parent of RMB 265.822 billion in the first three quarters. A year-on-year increase of 5.56%; China Construction Bank followed closely, achieving a net profit of 247.282 billion yuan attributable to the parent, a year-on-year increase of 6.52%. In addition, the Postal Savings Bank achieved a net profit of 73.849 billion yuan attributable to the parent, a year-on-year increase of 14.48%, ranking first among the six major banks.
Among the joint-stock banks, the net profit of China Merchants Bank and Industrial Bank in the first three quarters reached 106.922 billion yuan and 71.808 billion yuan respectively, a year-on-year increase of 14.21% and 12.13%; Ping An Bank’s net profit attributable to the parent was 36.659 billion yuan, a year-on-year increase of 25.80%. The growth rate has won the “top chip” of the stock line.
“Most banks’ earnings growth accelerated slightly and exceeded our expectations.” Yan Meizhi, head of financial industry research at UBS Greater China, gave an “exceeding expectation” evaluation of the third quarterly reports of A-share banks.
It is worth noting that, judging from the three quarterly reports, there is still pressure to stabilize the revenue side of listed banks, and the year-on-year decline in intermediate income has become the main drag on the performance growth of some banks.
Data show that in the first three quarters of this year, the net fee and commission income of 23 A-share listed banks shrank year-on-year, with joint-stock banks down by about 10% year-on-year on average. “Public fund and trust agency sales and bank card charges are the main dragging factors.” Yan Meizhi believes that state-owned banks’ middle-income business is more resilient than joint-stock banks, with an average year-on-year decline of only 2%.
Wang Bingjie, an analyst at Shengang Securities, said that the year-on-year growth rate of net bank fee and commission income has slowed down significantly, mainly due to capital market fluctuations and frequent real estate project risks.
“According to the data disclosed by China Merchants Bank and Ping An Bank, the leading wealth management banks, China Merchants Bank’s wealth management fee and commission income was 25.59 billion yuan, a year-on-year decrease of 13.1%. The net income from fees and commissions of Ping An Bank decreased by 3.043 billion yuan year-on-year, which was mainly due to the decline in agency fund income due to factors such as the market.” Wang Bingjie said.
Further growth in credit
Due to the spread of the epidemic during the year, the speed of credit issuance of many banks has been affected to a certain extent, especially the banks in the Yangtze River Delta and Pearl River Delta regions. However, during the year, listed banks generally increased loans to key areas and weak links in the real economy such as manufacturing, inclusive small and micro businesses, and green development, and the growth rate of loan scale was compensated to some extent.
Recently, China Merchants Bank President Wang Liang revealed at the performance exchange meeting that due to insufficient demand for effective credit, China Merchants Bank has made great adjustments to its loan growth plan this year. “Relying on an increase of more than 60 billion in corporate loans year-on-year to make up for the shortage of retail loans; the increase in bills and non-bank loans to make up for the shortage of general loans.”
Data show that among the 42 A-share listed banks, 21 have loan balances that have increased by more than 10% compared with the end of the previous year, and the growth rate of manufacturing loans has increased significantly. Large state-owned banks have maintained a “leading goose” role in supporting the real economy. Among them, Industrial and Commercial Bank of China and China Construction Bank’s manufacturing loan balance grew by over 30%.
The team of Liu Zhiping of West China Securities pointed out that the credit investment of listed banks in the third quarter reflects the strong policy-driven characteristics. Credit increased in key areas such as industrial manufacturing, inclusive small and micro enterprises, and green development. The growth rate of real estate-related loans continued to slow down, but the quarterly increase Slightly repaired.
Under the policy of stabilizing the economy, credit issuance is gradually picking up, and many executives of listed banks expect that credit issuance will increase in the fourth quarter.
“Credit card loans have achieved recovery growth in the third quarter. If the epidemic situation is relatively stable and consumption rebounds, it is expected that credit card loans will maintain good growth in the fourth quarter, making up for the shortage of other retail products.” Wang Liang said that China Merchants Bank in the fourth quarter The investment will be further increased, including M&A financing, manufacturing loans, and equipment renewal loans.
Zhang Xuyang, secretary of the board of directors of Everbright Bank, also said at the third-quarter results conference that after the Shanghai epidemic eased in April, the bank’s credit issuance in the Yangtze River Delta has accelerated. He revealed that, while responding to the national policy of stabilizing the economy, Everbright Bank’s corporate loans grew faster in the first three quarters, and its project reserves were relatively sufficient. “In the fourth quarter, it will continue to maintain a relatively leading position in the first three quarters, and the focus of investment will be in accordance with the national policy requirements to support the real economy.”
At present, banks are actively responding to national policies and taking various measures to promote the real economy, but the consequent narrowing of net interest margins has also become a common challenge faced by the banking industry. “The measures to support the real economy have pushed the average yield of banks’ interest-earning assets to decline. In addition, affected by fluctuations in market capital costs, the average cost of interest-bearing liabilities has also risen.” A banker said.
Yan Meizhi also pointed out that after the second quarter of this year, the trend of changes in the net interest margin of the banking industry has become more differentiated. The net interest margin of most joint-stock banks has decreased by 1bp from the previous quarter, mainly because there are fewer deposits in the debt structure, and Lower interbank funding costs provide a buffer.
“Looking ahead, the industry-wide reduction in deposit interest rates in mid-September should help reduce the downward pressure on net interest margins, especially for large banks with more deposits.” Yan Meizhi said, but bank interest margins will still remain in 2023 further downward pressure.
Asset quality continues to improve
Steady and improving – this is the trend reflected in the asset quality of listed banks in the third quarter. Compared with the asset quality at the end of last year, a total of 31 banks’ non-performing ratios decreased this year, 8 banks slightly increased, and 3 banks remained unchanged.
According to the data of the third quarterly report, as of the end of the reporting period, a total of 15 of the 42 A-share listed banks had a non-performing ratio of less than 1%. Among them, Bank of Hangzhou and Bank of Ningbo are the lowest, both at 0.77%; followed by Changshu Bank with a non-performing rate of 0.78%. At the end of the reporting period, Qingnong Commercial Bank had the highest NPL ratio of 1.91%.
Wang Bingjie believes that the continuous improvement of the non-performing loan ratio of listed banks is mainly attributable to the increased efforts in non-performing disposal in recent years, and the asset quality is at a relatively good level in recent years.
“However, from the point of view of the leading indicators of non-performing loans, the loan ratio and the overdue loan ratio, many banks have increased. For example, the overdue loan ratio of China Merchants Bank with better qualifications has increased, and the Ping An Bank’s focused loan ratio has increased, indicating that the overall asset quality is still high. There are certain potential risks, mainly affected by real estate policies and the epidemic.” Wang Bingjie further said.
Judging from the provision coverage ratio, the average level of this indicator of the 42 A-share listed banks remained at a high level of close to 320%, with a strong ability to offset risks. Among them, Bank of Hangzhou has the highest provision coverage ratio of 583.67%; the five banks with a provision coverage ratio of over 500% are all from regional banks in Jiangsu, Zhejiang and Shanghai, namely Bank of Changshu, Bank of Zhangjiagang, Bank of Wuxi, Bank of Suzhou and Ningbo Bank. Minsheng Bank has the lowest provision coverage ratio at 141.06%.
As of the end of the third quarter, the provision coverage ratio of 31 A-share listed banks has increased compared with the end of the previous year. Among them, Jiangyin Bank has the largest increase, which has increased by 165.57 percentage points to 496.19% compared with the end of the previous year; China Merchants Bank has the largest decline. The provision coverage ratio at the end of the third quarter decreased by 28.2 percentage points compared with the end of the previous year, but remained at 455.67%. high position.
Looking forward to the future, the Zheshang Securities Research Report pointed out that due to the continued exposure of public real estate risks and the impact of the epidemic, the risk of non-residential consumer loans has been increased, and the asset quality of banks with more consumer loans and real estate layouts will still be under pressure.
(Editor: Qian Xiaorui)
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