① Small and medium bank stocks rose significantly in the early period. It is also to be expected that adjustments will be made when the annual report and quarterly report are about to end. ② The State Council report favors brokerage insurance, and the next step in the equity of local small and medium-sized banks may be uncertain. ③ From recommending banks by brokerage institutions, the vast majority recommended small and medium-sized high-quality commercial banks, such as Bank of Ningbo, Bank of Changshu, etc., and gradually, recommendation information on increasing the holdings of major banks appeared.
Financial Services Association, April 26 (Reporter Liang Kezhi) Bank stocks generally declined at the opening of the market today. Among them, many local urban and agricultural commercial banks, such as the Bank of Jiangsu and the Shanghai Agricultural Commercial Bank, led the decline. As of press release, the two banks had dropped 9.60% and 7.92% respectively. The Bank of Jiangsu almost came close to falling to a standstill. The increase was made by Industrial Bank, China Merchants Bank, Bank of Shanghai, and Bank of Zhengzhou. Among them, Industrial Bank had the biggest increase of 1.55%.
On April 26, three institutional sources interviewed told the Financial Federation that small and medium bank stocks rose significantly in the early period, and adjustments were to be made when the annual report and quarterly report were about to end, which was also to be expected.
However, the investment director of a private equity fund from Guangzhou also believes that the Bank of Jiangsu and the Shanghai Agricultural Commercial Bank just issued annual reports and quarterly reports last night, and weak expectations for the market may also be one of the reasons leading the decline. Overall, bank stocks are still being dragged down by real estate. Compared with local banks, the four major state-owned banks have stronger debt settlement capabilities, so they should still be cautious about investing in local commercial banks.
Another head of a large private equity firm in Shenzhen believes that the State Council released a report last night stating that “the proportion of state-owned financial capital in banking, insurance, brokerage and other industries should be adjusted in a timely and reasonable manner,” that market research may be more favorable to insurance and brokerage firms, and that the next step in the equity of local small and medium-sized banks may be uncertain.
At 10 o'clock on April 26, the Bank of Jiangsu happened to hold a quarterly results conference. Chairman Ge Renyu acknowledged that at present, the bank is still facing challenges such as insufficient effective demand and weak social expectations. Efficiency growth is generally under pressure due to narrowing interest spreads on financial companies and sluggish income. In particular, capital pressure on listed banks has further increased, and the development of the industry is still facing quite a few challenges.
However, Ge Renyu believes that the Bank of Jiangsu, which has location advantages, customer base advantages, and flexible institutional advantages, will be very resilient in development.
Bank stock market value rose 12.5% in the first quarter
People from institutions and funds all agree that the rise in bank stocks since the first quarter has been high and requires a pullback.
According to the Zhongtai Securities report, the market value of bank stocks in circulation in the first quarter was 7.4 trillion yuan, up 12.5% from the fourth quarter of last year. Among them, the ratio of bank shares held by the fund was 2.53%, an increase of 0.54 percentage points over 1.99% holdings in the fourth quarter of last year.
Looking at banks specifically, small and medium banks are heavy fund holdings. Judging from the changes in fund holdings in the share of tradable shares as of 1Q24, those that have increased the most positions were high quality urban agricultural commercial banks. Ruifeng, Suzhou, Changshu, Yunong, and Shanghai-agricultural holdings increased by 1.82%, 0.61%, 0.58%, 0.54%, and 0.49%, respectively.
According to data from Zhongtai Securities, as of the end of March, the Bank of Jiangsu and the Shanghai Agricultural Commercial Bank accounted for 2.36% and 1% of fund holdings, ranking 7th and 11th. Among the top ten holdings, only China Construction Bank was selected, accounting for 3.64%.
On April 23, Ping An Securities Report analyzed that the average dividend rate in the banking sector for the past 12 months was at an all-time high premium level compared to risk-free interest rates measured by 10-year treasury bond yields, and continued to expand, and dividend attractiveness continued to increase.
According to the Ping An Securities Report, since the release of the annual report, many bank stock dividends have prompted capital to pay more attention to high-dividend stocks, such as China Merchants Bank and Industrial Bank. As of April 22, the dividend rates of the two were 5.21%/7.37% respectively, which directly led to a month-on-month increase of 24 BP/6BP to 0.76%/0.28%, respectively, at the end of the first quarter.
The market believes that the State Council report is good for brokerage insurance
On the evening of April 25, the State Council issued a report on the research and processing of opinions and rectification and accountability in the special report on the management of state-owned assets of financial enterprises. The report “states that the Ministry of Finance and financial management departments are promoting further optimization of the layout of state-owned financial capital, rationally adjusting the proportion of state-owned financial capital in various financial industries, and rationally adjusting the proportion of state-owned financial capital in banking, insurance, securities and other industries in accordance with the principle of “progress and retreat, and reasonable flow”.
A head of a large private equity firm in Shenzhen believes that the State Council released a report last night stating that “the proportion of state-owned financial capital in banking, insurance, brokerage and other industries should be adjusted in a timely and reasonable manner,” that market research may be more favorable to insurance and brokerage firms, and that the next step in the equity of local small and medium-sized banks may be uncertain.
A Financial Services Association reporter noticed that since April, the vast majority of brokerage institutions' recommendations for banks have gone from recommending small and medium-sized high-quality commercial banks, such as Bank of Ningbo and Bank of Changshu, etc., to gradually showing recommendations for increasing the holdings of major banks.
Ping An Securities's April 23 report also showed that at the end of the first quarter, major state-owned banks generally received an increase in fund holdings. Among them, Industrial and Commercial Bank, Agricultural Bank, Bank of China increased their holdings by 4BP/1BP/2BP/1BP/1BP month-on-month to 0.19%/0.09%/0.07%/0.05%/0.04%. The undervaluation average return process and the increase in market share of major banks increased the market exposure of major banks.
On the other hand, the private equity company sources mentioned above believe that from a comprehensive perspective, bank stocks as a whole are still being dragged down by real estate. Compared with local banks, the four major state-owned banks have stronger debt settlement capabilities, so they should still be cautious about investing in local commercial banks.
According to the annual report released by the Shanghai Agricultural Commercial Bank on April 25, during the reporting period, the Group's corporate loans were mainly concentrated in real estate, leasing and business services, and manufacturing, with loan balances accounting for 14.71%, 13.35%, and 11.77% of the Group's total loans, respectively. At the end of the reporting period, the non-performing rate in the real estate industry increased due to the risk exposure of individual high-value companies, and the level of non-performing goods in other industries remained stable.
However, the Shanghai Agricultural Commercial Bank believes that considering that real estate loans are mainly invested in the Shanghai region, the geographical risk is relatively manageable, the guarantee mitigation is sufficient, the impairment calculation is sufficient, and the overall credit risk is manageable.
According to the Bank of Jiangsu's April 25 annual report, as of the end of last year, the real estate industry's loan balance was 82.1 billion yuan, down 7.1 billion from the end of the previous year, accounting for 4.56%, ranking fifth in industry distribution. However, judging from asset quality, the real estate defect rate was 2.54% last year, up 0.67%, the biggest increase in the industry.