In terms of operating performance, Huaxia Bank continues to improve its management level in pricing management and capital management in recent years, and the disposal of stock problem assets is also advancing steadily. The strategic promotion of science and technology, retail and integration in the future is expected to help improve the quality of statements and operations. Maintain the company's "overweight" rating.
Matters: Huaxia Bank released its 2020 results KuaiBao, with a preliminary calculation of the annual operating income and net profit of + 12.5% and-2.9% respectively compared with the same period last year; the non-performing rate in the fourth quarter fell to 1.8% from the previous quarter.
Revenue for the whole year maintained double-digit growth, and profits improved significantly in the fourth quarter. Huaxia Bank's full-year net profit is-2.9% year-on-year (the first three quarters are-7.4%), and the fourth quarter profit is significantly improved. Analysis: 1) income growth is basically stable: annual operating income year-on-year + 12.5% (year-on-year + 14.2%). The judgment of double-digit growth for the whole year is mainly due to the steady growth of net interest income brought about by the balanced development of volume and price during the year. 2) the reserve provision should converge and contribute to profits. It is estimated that Q4 single-quarter operating expenditure is + 6.2% year-on-year, which is lower than the revenue growth rate of the current quarter (+ 7.9%). It is expected that the asset quality operation is expected to stabilize, and the reserve provision for the current quarter has been restrained somewhat. It also drives the repair of profit growth (estimated Q4 homing net profit is + 7.4% year on year).
The expansion in the fourth quarter is still positive, contributing to the performance of net interest income. The company's total assets are + 2.1% quarter-on-quarter in the fourth quarter, while assets showed zero growth in the same period in 2019. We expect that in addition to the loose external liquidity in that quarter, credit also has a good performance. For the whole year, the company's total assets grew by 12.6% in 2020, coupled with higher pricing management requirements at both ends of assets and liabilities during the year (the net interest margin in the first three quarters increased by 15bp over the whole of the previous year, and is expected to continue to perform smoothly in the fourth quarter). It is expected that full-year net interest income growth may remain around 15%, becoming the main driver of double-digit growth in operating income.
The identification and disposal of defects were strengthened in the fourth quarter, and the subsequent provision may still be prudent. At the end of the fourth quarter, the non-performing loan ratio of Huaxia Bank was 1.80%, which was higher than that at the beginning of the year and the end of the previous quarter-0.03pct/-0.08pct. Combined with the decline in the company's provision coverage for the quarter (147.2%, a month-on-month decline in 10.4pct), we expect the identification of troubled assets, the disposal of non-performing assets or both sides to strengthen in the fourth quarter. Judging from the current absolute level of stock provision coverage and the broad asset quality level, the subsequent provision may still maintain a cautious attitude.
Risk factors: macroeconomic growth stalled downward; asset quality deteriorated faster than expected.
Investment advice: from the perspective of operating performance, Huaxia Bank has continuously improved its management level in pricing management and capital management in recent years, and the disposal of stock problem assets has also been advancing steadily. The strategic promotion of science and technology, retail and integration in the future is expected to help improve the quality of statements and business quality. Taking into account the better-than-expected earnings growth in the fourth quarter of 2020, adjust the 20211b 2022 EPS forecast to 1.32max 1.43 yuan (the original forecast 1.31Unix 1.43 yuan), the current stock price corresponds to 2021 0.41xPB, maintain the "overweight" rating.