Bank stocks have risen. China CITIC Bank, Bank of Nanjing, Bank of Agricultural Bank, Bank of Chengdu, Bank of Beijing, and Bank of Jiangsu have risen by more than 15% since this year.
In terms of ETFs, Huatianfu Fund Banking ETF, Wells Fargo Fund Bank Leading ETF, Huaan Fund Bank ETF Index Fund, China Merchants Fund Bank ETF Choice, E-Fangda Fund Bank ETF E-Fangda, Tianhong Fund Bank ETF Tianhong, China Southern Fund Bank ETF, Huaxia Fund Bank ETF Huaxia, Wells Fargo Fund Bank ETF, and Huabao Fund Bank ETF have increased by more than 10% this year.
Bank ETFs track the China Securities Bank Index, and the constituent stocks include 42 listed banks in the A-share market.
On the evening of March 4, Changshu Bank released a performance report. The 2023 operating income was 9.87 billion yuan, up 12.04% year on year; net profit attributable to the Bank's common shareholders was 3.282 billion yuan, up 19.61% year on year; and basic earnings per share were 1.2 yuan. By the end of 2023, the Bank's total assets were $334.479 billion, up 16.19% from the beginning of the year; total loans of $222,439 billion, up 15.00% from the beginning of the year; total deposits of $247.939 billion, up 16.16% from the beginning of the year; the non-performing loan ratio was 0.75%, down 0.06 percentage points from the beginning of the year; and the provision coverage rate was 537.88%, up 1.11 percentage points from the beginning of the year.
As of March 4, a total of 11 listed banks, including Bank of Hangzhou, China Merchants Bank, Bank of Changsha, Bank of Qilu, Bank of China CITIC, Bank of Qingdao, Bank of Xiamen, Bank of Lanzhou, Bank of Ningbo, Bank of Huaxia, and Bank of Changshu, have been released.
Judging from the performance report data, the net profit of the five banks of the Bank of Hangzhou, Bank of Changshu, Bank of Qilu, Bank of Qingdao, and Bank of Ningbo increased by more than 10% year-on-year. Among them, the net interest rate of the Bank of Hangzhou increased by 23.15% year on year, maintaining the high growth rate in recent years; Changshu Bank and Qilu Bank also increased their net profit by 19.61% and 18.02%, respectively. Furthermore, the Bank of Qingdao and the Bank of Ningbo increased by 15.11% and 10.66%, respectively.
Judging from industry data disclosed by the State Financial Supervisory and Administration, the net profit growth rate of commercial banks in 2023 was 3.2%. Compared with the previous three quarters, the net profit growth rate of major state-owned banks was basically the same, the net profit growth rate of stock banks increased, and the net profit growth rate of urban commercial banks increased under a low base; in 2023Q4, the asset quality of commercial banks remained steady, and the non-performing rate decreased by 2 bp to 1.59% quarterly.
Societe Generale Securities pointed out that the bank is about to enter the earnings season. The overall performance is expected to be stable, and it is concerned about investment opportunities in high-performing individual stocks. Looking at some listed banks that have already disclosed rapid performance reports, the overall performance is expected to be stable, and attention is being paid to investment opportunities in high-performing individual stocks.
In the context of economic recovery, it is recommended to focus on high-quality banks with outstanding valuations and cost-effective performance, while high dividend strategies are expected to continue to be interpreted, focusing on three main lines: small and medium-sized banks with outstanding performance valuations; high dividend strategies are still expected to continue to be interpreted; and banks that benefit more from the main line of economic recovery.
The Huachuang Securities Research Report pointed out that in 2024, banks will still face pressure to narrow interest spreads on the revenue side, but market expectations are already sufficient. At the same time, it is expected that debt-side deposit costs will still have room to decline, which can also ease the pressure on interest spreads to a certain extent. In the long run, the Central Financial Work Conference put forward requirements for high-quality financial development, further mitigation requirements for risk mitigation in real estate and urban investment platforms, and also proposed “broadening banks' capital replenishment channels.” Banks, as a key part of supporting the real economy, also need to maintain stable and sufficient capital. This also requires banks to maintain stable profit growth. Considering that current sector holdings and valuations are at historically low levels, we believe that the valuation fully contains the market's pessimistic expectations of the sector's fundamentals. It is recommended to actively lay out the bottom of the valuation and bottom up the short-term allocation. It is recommended to focus on major state-owned banks, the Bank of Jiangsu, and the Shanghai Agricultural Commercial Bank; banks with good business models are preferred in the long term.