KuaiBao summary: 1, steady performance upward: revenue accumulation year-on-year + 14%, net profit + 23.2%; two-year compound growth rate of 13.6%. Net interest income supported revenue growth of 10.2% over the same period last year, while non-interest income maintained a steady and high growth of 20.7% over the same period last year. 2. Net interest income in a single quarter increased by 3.9% over the previous quarter: supported by volume and price, and Q4 net interest margin rose from the previous quarter. The annualized net interest margin for a single quarter is estimated to rise to 2.34% from the previous quarter, which is expected to be mainly due to the joint contribution of debt-side pricing and structure. In the structural dimension, the increase in the proportion of low-cost deposits relieves the pressure on the cost of capital. China Merchants Bank's deposits increased sharply in the fourth quarter, with deposits rising 1.5 percentage points from the previous month to 75.5 per cent of total liabilities. Pricing dimension, deposit pricing and active liability pricing are expected to decline. We estimate that the cost of the interbank certificate of deposit of Q4 China Merchants Bank stock is 2.83%, which is 10bp lower than the third quarter. 3. China Merchants Bank's net non-interest income growth remained high, with an increase of 20.7% over the same period last year. With the continuous promotion of the company's great wealth management cycle chain, middle income is expected to maintain steady and high growth; other non-interest income is also supported on a low base basis. 4. Credit impulse, and the scale of new loans for the whole year is generally the same. The number of new loans for the whole year was 540.9 billion yuan, a slight increase of 2.4 billion over the 20-year increase, and the year-on-year figures of new loans in the first-fourth quarter were + 41.4 billion,-48.6 billion,-36.3 billion and + 45.9 billion, respectively. The advantage of deposits is significant, and the scale of new deposits far exceeds that of new loans. Deposits increased by 718.7 billion for the whole year, although 65.2 billion less than the 783.9 billion increase in the past 20 years, but the new deposits in the past 20 years are from a high base. The company's new deposits increased by 443.7 billion in 2019 and increased significantly by 337.6 billion in 20 years. The 21 years has maintained 20 years of high growth against the background of intensified pressure on the industry to attract deposits, highlighting the company's ability to capture deposits and a strong customer base. In addition, the amount of new deposits far exceeds that of new loans, which is also better than the performance of the industry. 5. The asset quality maintains a high margin of safety.
Bad double health. The defect rate has been falling since 2016 and is now at its lowest level since 2014. At the end of 2021, the defect rate was 0.91%, a month-on-month decrease of 2bp. The bad balance also decreased compared with the third quarter. The margin of safety is high. The risk preference of the company is low, and the overall safety margin is high. The coverage rate of corporate provisions was 441.34%, down 1.8% from the previous month, and the loan ratio was 4.03%, representing a decrease of 10bp compared with the previous month. The month-on-month decline in provision coverage and loan ratio is mainly due to a decline in the balance of loan impairment provisions compared with the third quarter, which does not rule out the continuation of the trend in the third quarter, because credit assets are in good condition and credit impairment is prepared to be reversed. The credit impairment loss of loans and advances in the first-third quarter was 11.241 billion yuan, compared with 14.457 billion yuan in the half-year, that is to say, the company reversed part of the impairment loss in the third quarter. It is also expected that the company will maintain a strong write-off based on the principle of prudence.
Investment advice: the endogenous driving force of performance is the most sustained, with continuous focus on recommendation. The current share price of the company corresponds to 2022E, 2023E PB 1.45X 5.28X/4 1.27X transposition PE8.87X 5.28X/4 7.72X.
79x). China Merchants Bank's indicators show its sound and excellent fundamentals at the same time, strong strategic implementation, retail business in the existing system, its moat can continue to deepen to adapt to the latest development of financial technology. China Merchants Bank has a high "scarcity" in banking stocks, which is worth holding for a long time, and is an excellent company that we focus on and continue to recommend.
Note: according to the performance of KuaiBao, we fine-tune the profit forecast and estimate that the homing net profit from 2022 to 2023 is 138.1 billion and 158.5 billion (the previous values are 138.3 billion and 157.6 billion).
Risk hint: the economic downturn is higher than expected, and the company's operation is not as good as expected.