① After disclosing the annual results yesterday evening, the stock prices of Everbright Bank's Hong Kong shares and A shares all dropped sharply after opening today. ② Wang Zhiheng said that in the case of an overall decline in revenue of 3.92%, the main reason for the 8.96% decline in net profit was an increase of 1,677 billion yuan in credit impairment provisions. ③ Wang Zhiheng said, “The fundamentals of Everbright Bank's operations are stable, and there are no major risks that should have been disclosed but not disclosed.”
Financial Services Association, March 28 (Reporter Peng Kefeng) How big is the relationship between bank performance and stock prices?
After disclosing the annual results yesterday evening, the stock prices of Everbright Bank's Hong Kong stock and A shares both dropped sharply today. Among them, the A-share stock price fell 9% at one point, and the H-share price fell 13% at one point.
In response, Everbright Bank Governor Wang Zhiheng responded urgently at the performance briefing held this morning, “The fundamentals of Everbright Bank's operations are stable, and there are no major risks that should have been disclosed but not disclosed.”
Investors disappointed with the results? Everbright Bank plummeted after opening today
Yesterday evening, Everbright Bank released its 2023 performance report. According to official data, the bank achieved revenue of 145.685 billion yuan last year, a year-on-year decrease of 3.92%. Net profit attributable to the bank's shareholders was 40.792 billion yuan, down 8.96% year on year. Among them, net profit for the fourth quarter decreased by 62.24% year on year.
Following the opening of the market today, Everbright Bank's A shares and H shares both experienced rare declines. During this period, Everbright Bank's A share price once fell 9%, and the H share price once fell 13%. A Financial Services Association reporter noticed that the banking sector of Hong Kong stocks and A-shares was generally sluggish after opening. Ruifeng Bank, Agricultural Bank, Bank of Communications, Industrial and Commercial Bank, and China Construction Bank had the highest declines at one point.
Why did Everbright Bank's stock price drop sharply today? This morning, the Financial Services Association reporter called the bank's investor hotline as an investor. The other party said they were concerned about the relevant situation and invited investors to check the live broadcast of today's Everbright results conference in a timely manner.
Governor Wang Zhiheng urgently “extinguishes the fire” at the performance conference
This morning, Everbright Bank Governor Wang Zhiheng responded to stock price fluctuations at the industry performance conference.
Wang Zhiheng said that in the case of an overall decline in revenue of 3.92%, the main reason for the 8.96% decline in net profit was an increase of 1,677 billion yuan in credit impairment provisions. “In the face of declining revenue, (Everbright Bank) increased its provision plan efforts, especially in the fourth quarter of last year. These measures have indeed had a certain impact on short-term profitability, but they are a more fundamental guarantee for long-term profitability.”
Wang Zhiheng also responded promptly to today's low stock price. “Seeing some feedback from the capital market on Everbright Bank, our fundamentals are stable, and there are no major risk events that should have been disclosed but not disclosed. Please rest assured that we are full of confidence in the future of Everbright Bank, and there is no need for people to worry too much about this.”
Dividends lag behind peers, and brokerage firms still give positive ratings
A Financial Services Association reporter noticed that judging from official data, Everbright Bank's cash dividend ratio lags behind its peers. Wang Zhiheng said that Everbright Bank's cash dividend ratio in 2023 was 25.06%, while major state-owned banks basically paid more than 30% last year. This year, CMB's dividend rate was 35.01%, Ping An Bank's dividend rate was 30%, and China CITIC Bank's dividend rate was 28.01%.
A brokerage banking analyst told the Financial Federation reporter that from the perspective of dividends alone, Everbright Bank's dividend situation this year is indeed slightly behind. Coupled with negative profit growth, this may be the reason for the bank's stock price turbulence. Increased provision planning can generally be understood as an increase in the handling of non-performing assets, which is positive for the bank's future performance development. Taken together, the banking sector has the characteristics of steady operation and can go through the cycle. Investors do not need to worry about short-term fluctuations in certain banks.
It is worth noting that Open Source Securities recently released a research report stating that Everbright Bank invests in public loans in the infrastructure+manufacturing industry, has a deep customer base, and the efficiency of retail transformation is being released at an accelerated pace; asset quality is stable, moderate and improving, the wealth management strategy is firm, and the brand effect is outstanding, and future revenue growth can be expected. The estimated net profit for 2023-2025 is 459/485/52.7 billion yuan, respectively, up 2.53%/5.49%/8.69% year-on-year, respectively. However, judging from the data released yesterday, it is clear that Everbright Bank's net profit and growth rate in 2023 are lower than expected in the above research report.
Open Source Securities also stated that Everbright Bank's asset-to-public advantage is stable, debt-side deposit costs have a lot of room to fall, asset-side advantage over public, and there is plenty of room for debt-side deposit costs to fall. For the first time, the coverage gave it an “increase in holdings” rating.