Summary of the report
Company overview
Central Plains Bank is the largest urban commercial bank in Henan Province. The company was established on December 23, 2014 and merged 13 urban commercial banks in Henan Province. At the end of 2016, it ranked first in terms of total assets, total deposits, total loans, shareholders' equity, operating income and the total number of outlets, accounting for 5.5% of the province's market share. The company is the only provincial city commercial bank in Henan Province, with a business network covering the whole province, including a head office, 17 branches and 421 branches, with a total of 439 business outlets, covering nearly 80% of the cities under the province's jurisdiction. Ranked by Banker 2016, it ranks 210th among the 1,000 banks in the world, 31st among Chinese commercial banks and 9th among Chinatown commercial banks.
The company's non-performing loan ratio dropped from 1.92% to 1.86%, due to the company's efforts to recover non-performing loans after restructuring and strict loan risk control. The increase in the balance of non-performing loans has led to a decline in the provision coverage rate to 207.09%, which is similar to that of the industry as a whole, while the provision coverage rate is better than the average and 150% higher than the regulatory requirements. Although the capital adequacy index has declined, it is higher than the regulatory requirements. The decline in the average rate of return on assets and the rate of return on net interest is mainly due to the intensification of market competition after the rate adjustment under the people's Bank of China and the relaxation of interest rates.
From 2014 to 2016, the company's total assets increased from 206947.8 million in 2014 to 433071.4 million RMB,CAGR 44.7%; operating income increased from 9520.0 million to 11803.7 million RMB, CAGR 11.4%; net profit increased from 2668.3 million to 3360.1 million RMB, CAGR 11.2%. The company's performance has maintained steady growth.
Industry status and prospects
According to the statistics of the China Banking Regulatory Commission, from 2010 to 2015, the total assets of city commercial banks increased from RMB7853 billion to 22.68 trillion, with a CAGR of 23.6%. The percentage of China's total banking assets rose from 8.2% to 11.4%, an increase higher than that of other types of commercial banks. In 2015, the non-performing loan ratio of city commercial banks was 1.4%.
Benefiting from the economic growth and geographical strategic advantages of Henan Province in recent years, Henan's banking industry is growing rapidly. at the end of 2016, the total deposits and loans of banks and financial institutions in Henan Province were 5.498 trillion and 3.714 trillion yuan respectively, compared with 15.5% and 16.0% CAGR at the end of 2011.
Advantages and opportunities
As the largest city commercial bank in Henan Province, the company continues to benefit from the significant development of Henan Province in the process of further deepening China's economic reform.
We have a prudent risk management system and comprehensive implementation measures for corporate banks, retail banks and county financial services that are deeply in line with the economic characteristics of Henan Province, so as to successfully improve and ensure the weaknesses and risks of asset quality.
Although the company's non-performing loan ratio shows a downward trend, it is higher than the industry average.
Credit quality of individual Industrial and Commercial households in Retail Banking Division
The yield on net interest continued to fall.
Valuation
The company's initial public offering is priced at HK $2.42-HK $2.53, with a market capitalization of HK $474.9-HK $49.65 billion after the IPO.
The prospectus did not disclose profit forecasts for 6196, and the offering was priced at 12.3-12.8 times 2016 earnings, higher than Hong Kong-listed domestic regional banks (5.4 times Zhengzhou Bank in 6196). The company is 1.06-1.1 times in terms of the net ratio of the prepared market, which is similar to the same industry. We consider the valuation unattractive and give IPO a dedicated rating of "5".