Lanzhou Bank ploughs Lanzhou, taking the lead in the province, with steady credit expansion and accelerated business transformation.
Company profile: deep ploughing Lanzhou, leading the province. (1) Historical evolution: the first A-share listed bank in Gansu Province.
Lanzhou Bank is the first local joint-stock commercial bank in Gansu Province with independent legal person status. it is listed on the main board of Shenzhen Stock Exchange in January 2022 and is the first A-share listed bank in Gansu Province. (2) ownership structure: the structure is diversified and the state-owned force is strong. The largest single shareholder is Lanzhou Finance Bureau (8.74%), the second largest shareholder is Lanzhou State-owned assets Supervision and Administration Commission (7.08%). Among the private shareholders, Huabang holding Group (5.22%) is one of the top 100 private enterprises in the country. (3) Business location: deep ploughing Lanzhou, covering the whole province. There are 177 branches of the company, of which 100 are located in Lanzhou, and the business outlets have achieved full coverage in the province. The scale of credit in Lanzhou is close to 70%. In 2021, the market share of deposits and loans reached 22.15% and 10.63% respectively.
Financial analysis: interest rate spreads stabilized, sending and receiving power. (1) net interest income: interest margin stabilizes. The net interest margin of 2022H was 1.85%, an increase of 13bps over the end of last year. On the side of interest-bearing assets, the rate of return is better, the rate of return on 2022H interest-bearing assets is 4.59%, which is in the forefront of commercial banks in listed cities; the structure is good, and loans account for 54.38%; the rate of return on loans is also better, including the pressure drop of mortgage loans, the main increase in the contribution of consumer loans in recent years, and the steady increase of infrastructure loans; the landing of rights issues brings effective capital replenishment, and the core tier one capital adequacy ratio of 2022H is 8.66%, which is higher than that at the end of last year. On the interest-bearing debt side, the cost reduction needs to be further promoted. The interest-bearing debt cost rate of 2022H is 2.99%, which is lower than that of the previous year, and the deposit cost rate is 3.11%. In terms of deposit structure, the rising of fixed deposits puts pressure on lowering costs, and the deposit self-discipline mechanism is expected to improve deposit pricing power. (2) non-interest income: fluctuating growth of handling fees, receiving and sending power in financial management. The net income of fees and commissions in 2022H and 2021 reached 193 million yuan / 384 million yuan respectively, which was + 17.25% and 70.97% respectively over the same period last year. The growth rate in the past five years was fluctuating. In 2021, the income from financial management exceeded 200 million yuan, an increase of 43.1% over the same period last year.
Asset quality: still to be repaired. (1) Book quality: bad improvement, overdue pressure. 2022H's "non-performing plus concern" loan rate is 6.31%, down 1.35pcts from the beginning of the year, and the overdue rate is 6.37%, raising 1.52pcts compared with the beginning of the year. (2) the level of provision: the level of provision increases steadily, but the gap still exists. The 2022H provision coverage rate reached 197.70%, and the "loan to loan ratio-defective ratio-concern rate" rebounded from the low point in 2020. 2022H has increased its 1.41pcts since the beginning of the year, and the broad provision gap still needs to be fixed.
Risk factors: macroeconomic growth declined sharply and the quality of bank assets deteriorated more than expected.
Conclusion: Lanzhou Bank ploughs Lanzhou and takes the lead in the province, with steady credit expansion and accelerated business transformation. We predict that the annual return net profit of the company in 2022-23-24 is 1.6 billion / 1.69 billion / 1.78 billion yuan, corresponding to EPS of 0.28 yuan / 0.30 yuan / 0.31 yuan, and the current A-share price corresponds to 2022 0.73xPB.