The growth rate of the Bank of Shanghai has slowed slightly, loan investment has been actively adjusted, and asset quality has fluctuated slightly.
Overview of the data
Bank of Shanghai's 22Q1-3 net profit increased 3.1% year on year, growth rate was -0.1pc month-on-month, revenue increased 0.5% yoy, growth rate -0.3pc month-on-month; at the end of 22Q3, the non-performing rate of the Bank of Shanghai remained flat at 1.25% month-on-month, the attention rate was +13bp to 1.80% month-on-month, and the provision coverage rate was +1pc to 303% month-on-month.
Performance growth has slowed slightly
Bank of Shanghai 22Q1-3 Guimu's net profit increased 3.1% year on year, growth rate was -0.1pc month-on-month, revenue increased 0.5% year on year, growth rate -0.3pc month-on-month, and revenue growth rate slowed slightly from the interim report. Let's take a look specifically:
The main supporting factors are: ① The contribution of provisions to profits increased. 22Q1-3 asset impairment losses were -5.5% year-on-year, and the growth rate was -6pc compared to the first half of the year; ② the drag on non-interest earnings was weakened, mainly benefiting from the recovery in the growth rate of other non-interest income of 22Q1-3 other non-interest income compared to the same period, and the growth rate was +12pc compared to the first half of the year.
The main drag factor was that interest spreads dragged on profits. The net interest spread for a single quarter in 22Q3 (beginning and end of the period) fell 15 bps to 1.46% from 22Q2, due to a decline in returns on interest-bearing assets. The 22Q3 quarterly interest-bearing asset yield (beginning and end of the period) fell 14 bps from 22Q2. The judgment was mainly due to interest rate cuts and loan investment mainly for the public sector, which caused loan yields to continue to decline.
Actively adjust loan investment
The total loan amount at the end of 22Q3 increased 6.8% year on year. The growth rate declined slightly from the end of 22H1. However, it was noted that the company actively promoted credit restructuring, and credit investment in sectors such as inclusive finance, green finance, science and innovation finance, and manufacturing grew faster. Specifically, at the end of 22Q3, inclusive loans increased 34% from the beginning of the year, green loans increased 100% from the beginning of the year, loans to science and innovation enterprises increased 20% from the beginning of the year, and manufacturing loans increased 23% from the beginning of the year.
Asset quality fluctuated slightly
On the negative side, Bank of Shanghai's non-performing rate remained flat at 1.25% month-on-month at the end of 22Q3. In terms of forward-looking indicators, the attention rate was +13bp to 1.80% month-on-month. Subsequent monitoring of loan migration needs to be observed; in terms of provision, at the end of 22Q3, the Bank of Shanghai's provision coverage rate was +1pc to 303% month-on-month, and the level of provision was relatively adequate.
Profit forecasting and valuation
Bank of Shanghai's net profit is expected to increase 3.7%/5.1%/6.2% year-on-year in 2022-2024, corresponding to BPS 14.14/14.22/14.33 yuan of shares. The current price corresponds to 0.40/0.40/0.40 times the PB valuation. The target price is 7.07 yuan/share, corresponding to 0.50 times PB in 22 years, and the current price space is 24%.
Risk warning
The macroeconomic economy has stalled, and there has been a sharp outbreak of malaise.