Since the beginning of this year, under the influence of external market fluctuations, worries about bank asset quality under downward economic pressure, and increasingly fierce competition in the financial industry, among the 35 A-share banks, 25 have broken net bank stocks, accounting for more than 70%. There are only 10 bank stocks whose share prices remain above net assets.
However, a reporter from the Securities Times noted that Ningbo Bank, China Merchants Bank, Changshu Bank and Ping an Bank, which have outstanding retail business, as well as some sub-new bank shares have not been completely broken, which means that due to the great differences in bank types, profitability, and asset quality, the performance of bank stocks is differentiated.
70% of bank shares are net.
Since the beginning of this year, the number of bank IPO has reached the highest level since 2017, and the process of bank A-share listing has accelerated.
However, broken net is the norm for the vast majority of A-share bank stocks. According to statistics from the Securities Times, as of November 29, 25 of the 35 bank stocks had been broken, and none of the major state-owned banks had been spared, accounting for 71.43% of the total. The top five were Huaxia Bank, Bank of Communications, China Minsheng Banking Corp, Bank of Beijing and Bank of China Ltd., with price-to-book ratios of 0.57,0.61,0.61,0.63,0.66 respectively. Among them, Huaxia Bank has the lowest valuation, as of November 29, the latest closing price of the stock is 7.43 yuan per share, while by the end of the third quarter of 2019, Huaxia Bank's net assets per share is 13.09 yuan.
According to the analysis of people in the industry, the net breakage of bank stocks is affected by many factors: first, external uncertain market factors have led to great fluctuations in stock prices in the secondary market, and bank stocks have also been affected to a certain extent; on the other hand, the downward pressure on the economy has increased. financial deleveraging, off-balance sheet assets return to the balance sheet and other effects, outside investors are more worried about the asset quality and capital adequacy ratio of banks.
Zheshang Securities strategist Zhang Yanbing said in an interview that with the continuous landing of the opening-up policy of the financial industry, the competition in the domestic banking industry is becoming more and more intense. At the same time, after the introduction of LPR by the central bank, the net interest margin of bank listed companies may narrow, and investors will have some doubts about the future performance of bank stocks.
Continuous differentiation of performance
More than 70% of the bank shares are broken, so what are the characteristics of the 10 unbroken banks?
Under the collapse of bank shares one after another, Ningbo Bank, Zijin Bank, China Merchants Bank, Changshu Bank, Qingnong Commercial Bank, Xi'an Bank, Qingdao Bank, Ping an Bank, Suzhou Bank and Zhangjiagang Bank have become unbroken "minorities."
The reporter noted that among the above banks, Zijin Bank, Qingnong Commercial Bank, Xi'an Bank, Qingdao Bank and Suzhou Bank are all secondary new shares listed this year, except Zhangjiagang Bank, which is on the edge of breaking the net (1.02 times PB), Ningbo Bank, China Merchants Bank, Changshu Bank and Ping an Bank, all have outstanding performance in retail business, and asset quality has been continuously optimized.
Industry analysts said that at present, there is an obvious differentiation in the performance of the banking sector, especially under the weak economy, banks represented by Ningbo Bank and China Merchants Bank have more than 300% provision coverage due to their obvious advantages in retail business. the valuation premium is significantly higher than the industry average.
In fact, the performance differentiation of bank stocks is also reflected in the performance.
According to Wu Pingping, an analyst at Galaxy Securities, there is an obvious gap between banks in terms of performance. In the first three quarters of 2019, commercial banks achieved a total net profit of 1.65 trillion yuan, an increase of 5.91% over the same period last year, or 0.53% lower than in the first half of the year. According to the type, the profit growth rate of large banks and stock banks rebounded, increasing by 0.11 and 0.74 percentage points to 5.98% and 11.23% respectively over the first half of the year, while the profit growth rate of agricultural and commercial banks fell by 2.78 percentage points to 4.89%, while the growth rate of urban commercial banks turned negative to-0.63%.
By the end of the third quarter of 2019, the non-performing rate of commercial banks reached 1.86%, up 5bp from the previous month, and the provision coverage rate was 187.63%, down 2.98% from the previous month. From the perspective of sub-banks, with the exception of stock banks, the bad rate of other banks has increased, and the bad rate of city commercial banks has risen by 0.18 percentage points to 2.48%, and the deterioration of asset quality is more obvious.
Similarly, by the end of the third quarter of 2019, the capital adequacy ratio of commercial banks was 14.54%, 0.42 percentage points higher than that of the previous month. The capital adequacy ratio of all kinds of banks increased, and the capital strength of large banks and joint-stock banks increased significantly.
Ma Xiangyun, an analyst at Soochow Securities, believes that the overall asset quality of the banking industry is in the window period of "the last round of risk is gradually digested, and a new round of economic downward pressure has not yet appeared".
"in recent years, most banks have stepped up write-off and disposal, and the defect rate has continued to decline and the provision coverage has increased, but bank management and investors are still worried about the pressure on asset quality in the future. in the future, the differentiation of bank asset quality and risk offset capacity will be more obvious." Ma Xiangyun said.
Affected by the return of off-balance sheet assets and the increase in loans to small and medium-sized enterprises, "in particular, life will be more difficult for small and medium-sized banks in some economically declining provinces in the central and western regions, and there is an urgent need to broaden financing channels and ease capital pressure." A person from the strategic research department of a city commercial bank in central and western China told reporters, "although regulation encourages banks to issue preferred shares and other supplementary capital, many banks with a size less than 500 billion will not be enthusiastic about subscribing for institutional funds if they operate in a market-oriented way."
Measures to stabilize stock prices have been introduced one after another.
Due to the lower-than-expected stock price performance, since the beginning of this year, eight banks, including Changsha Bank, Guiyang Bank, Shanghai Bank, Wuxi Bank and Jiangyin Bank, have reached a certain trading day, triggering stable share price conditions. Bank shareholders and executives have stepped in to increase their holdings.
On November 21, Guiyang Bank announced that the company's measures to stabilize the stock price had been completed, and three shareholders, including Guiyang State assets, had increased their holdings by nearly 9 million shares, accounting for 0.28% of the company's total share capital, and senior executives had increased their holdings by 140000 shares, with an increase of 1.178 million yuan.
On August 30, Changsha Bank announced that as the closing price of the stock fell below 8.78 yuan for 20 consecutive trading days, meeting the conditions for triggering measures to stabilize the stock price, the bank will convene a board of directors to formulate and announce specific plans to stabilize the stock price.
On July 6, the Bank of Shanghai also announced a plan to stabilize the stock price, and the bank will take measures to increase the shares held by shareholders of more than 5% to fulfill its obligation to stabilize the stock price. Among them, Lianhe Investment, Shanghai Group and Santander Bank increased their holdings by a total of not less than 200 million yuan.