Ping An Bank (000001): Stock risk declines significantly this year focusing on debt costs
On January 13th, Ping An Bank’s 2019 return to net profit +13.
6%, revenue +18.
Defective rate 1.
65%, provision coverage rate of 183% (-3pc from the previous month).
Brief Comment 1. The growth rate of revenue and net profit in the first three quarters of the previous quarter decreased. Ping An’s revenue / net profit exceeded the growth rate by 18.
8% / 15.
5%, but only 18 in the fourth quarter.
2% / 13.
6%, the growth rate decreased month-on-month.
In the fourth quarter, the revenue declined slightly from the previous quarter. It is expected that the growth rate of middle-income revenue will decline slightly, because loans will increase by 8% month-on-month. NIM is expected to remain stable in the fourth quarter, and the index net income will maintain a steady growth.In relative.
In the fourth quarter, the growth rate of net profit decreased by 2% month-on-month. It is expected that the provision for loans overdue for more than 60 days will result in an increase in provisioning, and the net profit growth rate will improve, which is within the market’s expected range.
It is estimated that Ping An’s net profit growth rate of nearly 14% is still second to none in joint-stock banks.
2. The bad rate decreased 3 months before the previous month.
68%, compared with 1 in the fourth quarter.
65%, down 3 basis points from the previous quarter.
At the same time, the proportion of loans overdue for more than 90 days1.
35%, 20 basis points lower than in the second quarter; 20% overdue / non-performing loans was 82%, 8 basis points lower than in the first half of the year; 60% overdue / non-performing loans was 96%, 14 basis points lower than in the early stage.It is expected to decrease by at least 10 bp compared to the first half.
At the same time, the provision coverage ratio reached 183%, an increase of 13bps from the previous quarter.
After all loans that are overdue for more than 60 days are counted as non-performing loans, the non-performing ratio is still lower than the previous month, and the newly generated non-performing loans are expected to decrease significantly.
Increasing efforts to deal with existing risks, and far exceeding the additional risks, is the lead that leads to a significant decrease in the non-performing ratio of joint-stock banks.
The decline in inventory risk is one of the core logics of Ping An Bank’s estimated repair. After the proportion of overdue loans has steadily decreased, it is expected that changes in market asset asset quality will continue to improve and continue to contribute to the estimate.
Overdue loans are the main representative of stock risk. In 2020, the risk of overdue industry stocks will decline. The size and proportion of overdue loans will continue to decrease, and Ping An is no exception. At the same time, because Ping An Bank previously had a high proportion of this indicator, its marginal improvement was more significantHowever, the contribution to the estimate is even more significant.
3. The deposit and loan structure continued to be optimized. At the end of the fourth quarter, the proportion of retail loans reached 58.
4%, an increase of 0 from the previous month.
6%, the expected increase is mainly from credit card and auto finance loans. Compared with the previous sharp rise in retail loans, the percentage increase in the second half 杭州桑拿 of the year is extremely limited, indicating that risk reduction is decreasing and risk control is becoming stricter.The implied non-performing rate behind the scattered loans of the increased amount is also lower than before.
We expect that the growth rate of retail loans will remain slow and steady in the future.
Under the strategic guidance of “technology-led, retail breakthrough, and fine-to-public”, the retail goal has been steadily achieved. Subsequent investment in public debt will be strengthened. Industries, customers, and risk control will all be more effective than the previous ones.The business has changed significantly.
At the end of the fourth quarter, the ten-year growth rate of deposits was 14.
5%, corporate deposits increased by 11.
2%, corporate current deposits grow by 11 per year.
6%, the 北京桑拿洗浴保健 ten-year growth rate of public deposits still exceeds the growth rate of all deposits.
However, it is expected that after 2020, the expansion of public loans will increase the growth rate of public deposits and current demand deposits.
At the same time, we expect to introduce new regulations for the supervision of structural deposits. The scale and proportion of Ping An’s structural deposits are expected to decline steadily in the fourth quarter.
The decline in debt-side cost ratio is the main focus of Ping An Bank in 2020.
If the growth rate of public deposits steadily picks up, and at the same time the proportion of high interest rates negatively exceeds the declining rate, the interest rate on the debt side will steadily decline. We wait and see.
In the LPR down cycle, because retail loans account for the highest proportion, the decline in asset-side interest rates is relatively small. At the same time, if its liability-side costs begin to decline steadily, its NIM advantage in the comparable industry will be extremely significant.
4. Investment suggestion: Despite the expected fourth quarter performance, the stock risk has decreased. It is also a great advantage to lightly enter the market after changing the baggage.The three advantages of retail advantages, falling inventory risk and lower debt cost ratio are the core reasons for our continued bullishness on Ping An Bank.
In 2019, improvements in all aspects were very significant, and the market also pointed to higher valuations.
In 2020, the first two points will still be the focus, but the most critical point is the significant reduction in the rejection cost rate.
Main concerns: the growth rate of public deposits, the proportion of structured deposits, and the change in the proportion of peer rejections.
We forecast revenue / net profit to grow 16% / 13% per year in 2020, with EPS / BVPS at 1.
8, corresponding to PE / PB is 10.
4x / 1.
At present, Ping An Bank’s estimate is still low, and PB is 20% lower than its highest point in 18 years.
We maintain our BUY rating with a 6-month target price of 22 yuan.