The Bank of Shanghai released its three-quarter report that revenue in the first three quarters was 41.456 billion yuan, up 10.44 percent over the same period last year. Net profit returned to its mother was 16.644 billion yuan, up 10.58 percent from the same period last year. Basic earnings per share was 1.17 yuan, up 10.38 percent from the same period last year.
The continued acceleration of performance growth is mainly driven by non-interest income: in terms of revenue, the year-on-year growth rate in the first three quarters was 10.44%, up 1.42pct from the first half; the third quarter growth rate was 13.43%, which was higher than the 0.8pct growth rate in the second quarter. Itemized, the growth in revenue was mainly driven by net income from fees and commissions: net income from interest in the first three quarters increased by 6.94% compared with the same period last year; net income from fees and commissions increased by 38.3% compared with the same period last year, including the increase in income from fees and the decline in expenditure; other non-interest net income increased by 5.9% year-on-year, with the year-on-year growth rate from negative to positive.
Dragged down by the narrowing of interest spreads, the growth rate of net interest income has declined: in the first three quarters, the net interest income of the Bank of Shanghai increased by 6.94% compared with the same period last year, which decreased year-on-year and month-on-month, mainly due to the narrowing of interest spreads. The spread of interest rates of the Bank of Shanghai in the first three quarters was 1.73%, which was 9bp lower than that at the beginning of the year. The spread of interest rates in the third quarter was 1.71%, which was also narrowed from the previous quarter. Specifically, we estimate that the rate of return on interest-bearing assets in the third quarter is 3.59%, which is 2.22% lower than that in the second quarter (single quarter) and is unchanged from the second quarter.
Non-performing loans were flat, attention declined, and asset quality was relatively robust: at the end of the third quarter, the non-performing loan ratio of the Bank of Shanghai was 1.19%, which was the same as that at the end of the second quarter. In terms of non-performing loans, we estimated that the annualized non-performing loan generation rate was 1.27% in the first three quarters and 1.54% in the third quarter. The proportion of concerned loans decreased by 16bp to 1.70% at the end of the second quarter compared with the end of the second quarter. Provision coverage increased 7.74pct to 331.79% from the end of the second quarter. The generation rate of non-performing loans has increased, but the proportion of "non-performing plus concern" has declined, and asset quality has remained stable as a whole.
Investment suggestions: the asset-liability structure of the Bank of Shanghai has improved, and the asset quality has improved steadily, creating conditions for further growth in performance. It is predicted that the EPS for 2021-2023 will be 1.75 PB 2.06 PB 2.44 yuan, and the current stock price will be 0.54X/0.49X/0.44X for 2021-2023, with a target price of 9.39 yuan (0.7 times PB), covering the "buy" rating for the first time.
Risk tips: macroeconomic downturn, the outbreak of bad risks of banks; the epidemic situation at home and abroad rebounded more than expected.