Highlights of the report: 1. Under the retail transformation strategy, retail credit maintained a high growth in the second quarter, leading to a continuous increase in the proportion of loans and continuous optimization of the asset-side structure. Retail loan Q2 remained at a high growth rate of 10.5%, while the growth rate of corporate loans was not weak, driving credit growth to expand in the second quarter on the basis of high growth in the first quarter.
The proportion of total loans, corporate loans and personal loans increased by 3.3 per cent, 1.8 per cent, 1.5 percentage points to 59.1 per cent, 43.3 per cent, 15.9 per cent, all at historically good levels. Among them, retail loans accounted for 46.2% of the increase in the first half of the year, personal consumption loans increased by 3.04 billion yuan over the beginning of the year, accounting for 47.5% of the retail increase, and personal mortgage loans increased by 1.219 billion yuan over the beginning of the year, accounting for 19.1% of the retail increase. The company actively promotes the transformation of large-scale retail, and the expansion of households has achieved results. 2. The quality of assets remains stable. The defective rate improved, and the unhealthy freshmen decreased. Defect rate 1.67%, month-on-month downlink 1bp. The cumulative annualized net generation fell to 0.45%; the provision coverage rate was 218.10%, an increase of 2.98 percentage points from the previous month, and the marginal risk offset capacity improved.
The report is insufficient: 1. Q2 single-quarter spreads are 10 bp lower than the previous quarter. Asset-side quarter-on-month downward 8bp is expected to be the impact of interest rate factors. The debt-side interest rate is higher than the upward 2bp, which is expected to be mainly affected by structural factors, with the proportion of deposits falling by 3.3% and the deposit liquidity declining at the same time. 2. The net fee income is-58.7% compared with the same period last year, and the year-on-year growth rates of settlement and agency services are-25.8% and-13.8%, respectively.
The main reason is to respond to the national policy call to strengthen the reduction of fees and benefits to the real economy.
Investment advice: the company has high growth and low valuation. Company 2021E, 2022E PB 0.75X 7.88X/7.36X 0.70X 7.88X/7.36X (Agricultural Commercial Bank PB 0.72X Accord 0.66X scape PE 7.55X/6.88X), the company deeply ploughs the native land of Nanjing, adheres to the market orientation of "serving agriculture, rural areas and farmers, serving small and medium-sized enterprises, serving urban and rural areas", and goes deep into the process of urbanization in Nanjing through channels. Over the past 17 years, the company's business has gradually returned to its origin, the cost-side expense control ability is good, the regional economic vitality in Nanjing is strong, the asset quality is stable and good, and it is recommended to pay attention to maintain the "increase" rating.
Risk hint: the macro-economy is facing downward pressure, corporate deposit competition is facing pressure, and performance management is not as good as expected.