Huaxia Bank Announces Quarterly report 2021
During the reporting period, the company achieved a net profit of 5.4 billion yuan, an increase of 10.6% over the same period last year, and the growth rate of net profit changed from negative to positive.
Net interest margin drags down revenue growth, while provision feeds net profit growth
At the end of the first quarter of this year, the company's total assets increased by 11.6% to 3.47 trillion yuan compared with the same period last year, with a basically stable growth rate, with a core tier one capital adequacy ratio of 8.66% at the end of the period.
In the first quarter of this year, net operating income reached 23.6 billion yuan, an increase of 0.1% over the same period last year, which was 12.4% lower than last year's annual report. profits before provisions in the first quarter increased by 3.6% year-on-year, 12.7% lower than last year's annual report, mainly dragged down by net interest spread. the loss of asset impairment in the first quarter increased by only 0.1% compared with the same period last year, which contributed significantly to the rebound in net profit growth.
The tail warping factor causes the net interest margin to decline compared with the same period last year
The company's net interest margin in the first quarter of this year was 2.45%, which was 19 bps lower than the same period last year, dragging down revenue growth, mainly due to the tail-warping effect of the decline in asset-end returns in the second half of last year, and the company's debt cost was basically stable.
Increased provision coverage
The company's failure rate at the end of the first quarter of this year was 1.79%, down 1bp from the beginning of the year; the attention rate was 3.37%, down 6bp from the beginning of the year; the end-of-period provision coverage was 15 percentage points higher than at the beginning of the year to 162%, and the loan allocation increased by 24bps to 2.89% compared with the beginning of the year. At present, the company's provision coverage is still not high, but the month-on-month increase is significant.
Investment suggestion
The company's performance is in line with expectations, and we keep the profit forecast unchanged. We expect the net profit in 2021 to 2023 to be 23.6 billion yuan / 26 billion yuan / 28.6 billion yuan, a year-on-year increase of 9.5% and 10.2%, corresponding to diluted EPS1.89 yuan / 2.05 yuan / 2.22 yuan. The dynamic PE corresponding to the current stock price is 3.3x/3.1x/2.8x, and the dynamic PB is 0.4x/0.4x / 0.3x, maintaining the "overweight" rating.
Risk hint
The continued weakening of the macroeconomic situation may have a negative impact on the quality of bank assets.