On January 16, Zhangjiagang Bank released its 2022 results KuaiBao: operating income of 4.814 billion yuan (YoY+4.27%) and net profit of 1.688 billion yuan (YoY+29.50%).
Home net profit growth and ROE eye-catching, profitability continues to be excellent. In 2022, revenue reached 4.814 billion yuan, the year-on-year growth rate slowed to 4.27%, mainly affected by Q4 single-quarter revenue (YoY-3.71%); the net interest income was 3.919 billion yuan, the year-on-year growth rate rebounded slightly to 6.18%, so it is speculated that Q4 revenue weakness is mainly dragged down by non-interest income. The net profit for the whole year reached 1.688 billion yuan, an increase of nearly 30% over the same period last year. The single-quarter net profit of the four quarters increased by more than 25% compared with the same period last year. The annual ROAE was 12.21%, which was the highest in the past five years, and the profitability was excellent.
Loans have grown by more than 15% for four consecutive quarters and have a strong ability to acquire assets. At the end of 2022, the loan balance was 115 billion yuan (YoY+15.24%), and the new loan for the whole year was 15.2 billion yuan. The pace of Q1-Q4 launch was first fast and then slow, which was basically in line with market expectations. Relying on the developed economy of southern Jiangsu and the blessing of the "two small" franchises, Zhangjiagang Bank has methodically promoted its expansion in different places in recent years, increasing the number of public and retail customers by more than 40% in 2022.
The debt side is also strong, with deposit growth of more than 15%, but the deposit-to-loan ratio is still high. Under the influence of industry factors such as the convergence of retail customers' risk preference and the inflow of off-balance sheet financial funds into the balance sheet, the balance of deposits in Zhangjiagang was nearly 140 billion yuan (YoY+15.22%) at the end of 2022, the highest growth rate in four quarters. Affected by the accelerated expansion of deposits, the marginal deposit-to-loan ratio has fallen to 82.42%, but it is still at a high level in the industry; the scissors gap between loans and deposits has narrowed to 0.01%, and the debt side provides a solid foundation to support the steady expansion of assets.
The defect rate continues to drop, and the marginal provision coverage rate decreases slightly, but it is still higher than 500%. The asset quality of Zhangjiagang Bank has improved steadily, and the non-performing rate further fell to 0.89% at the end of 2022, compared with 1BP at the end of Q3. The provision coverage rate is higher than that at the end of Q3, but still maintains a high level of 519.71%, up from 475% at the end of 2021. The margin of provision safety is large, so it provides a solid support for performance release. As the stock burden continues to clear and the incremental identification remains strict, the asset quality will continue to be optimized in the future.
Investment recommendations Zhangjiagang Bank home net profit increased year-on-year, ROE rebounded to the highest level in nearly five years; deposit and loan growth rates are higher than 15%, under the "two small" speed competition mechanism, the scale is expected to be further improved; the asset quality is stable and the margin of provision safety is larger. We maintain its "buy" rating.
Risk tips: risks brought by business transformation; stricter regulatory policies; downside risks of economic growth, etc.