Summary of the annual report: the net profit of Bank of Shanghai in 2021 increased by 5.54% compared with the same period last year, and its operating income increased by 10.8% compared with the same period last year; the cost-income ratio was 21.5%, up 2.59% from the same period last year. At the end of the year, total assets increased by 7.8% over the beginning of the year, loans increased by 11.4%, and deposits increased by 11.8%. At the end of the year, the non-performance rate was 1.25%, the provision coverage rate was 301%, the loan ratio was 3.76%, and the core tier one capital adequacy ratio was 8.95%. The cash dividend rate in 2021 is 27.06%.
Shanghai Bank's revenue growth improved in 2021, driven by wealth management, the growth of fee income was beautiful, the growth of deposits improved, and the optimization of negative structure continued. The company's bad identification became stricter and faster in the fourth quarter, and the defect rate rose from the third quarter, but the absolute level was still lower than the average of listed banks with published annual reports. It is recommended to continue to track the dynamics of asset quality.
Support the main points of rating
Revenue growth is steadily improving, and non-credit impairment is intensified.
The bank of shanghai's full-year revenue grew 10.8% year-on-year, up slightly from the previous three quarters (+ 10.4% precinct YoY).
With the improvement of interest spreads, net interest income increased by 11.1% compared with the same period last year; with the support of wealth management, net income from handling fees increased by 61.3% compared with the same period last year. With the increase in cost and income and the increase in provision, the net profit for the whole year increased by 5.54% compared with the same period last year, which was lower than the growth rate of revenue and profit before provision (+ 7.0% YoY). The scale of losses in 2021 increased by 9.3% over the same period last year, of which loan losses decreased by 43% and non-credit losses increased by 398%, mainly because the company focused on increasing the provision of losses in areas such as real estate, financing platforms and non-credit businesses. it is necessary to further track the trend of asset quality in related areas.
Deposit performance improved, retail loans grew faster than public loans
The deposit performance of the Bank of Shanghai improved in 2021, an increase of 11.8% over the same period last year. Deposit performance was better than the average of listed banks, accounting for 59.26% of total liabilities, an increase of 2.15 percentage points over the end of last year.
Loans increased by 11.4% over the beginning of the year, while loans for enterprises and retail increased by 10.4% and 11.7% respectively, accounting for 60% and 32% of loans respectively.
Valuation
Taking into account the impact of individual overdue business, we adjust the company's 2022Universe EPS to 1.70Universe 1.87 yuan (formerly 1.78Universe 1.93 yuan). The current stock price corresponds to 2022Universe 2023 PB for 0.47x/0.43x, the valuation is at the low level of listed banks, maintaining the overweight rating.
Main risks faced by rating
The economic downturn led to the deterioration of asset quality more than expected; supervision and control exceeded expectations.