浦发银行(600000):业绩基本符合预期 不良双降趋势延续

Pudong Development Bank (600000): the performance is basically in line with expectations and the double downward trend continues.

廣發證券 ·  08/10/2022  · Researches

Revenue and profit grew steadily, and the performance was basically in line with expectations. Pudong Development Bank released its 2022 half-year results KuaiBao, 2022H1 revenue and return net profit increased by 1.31% and 1.13% respectively over the same period last year, an increase of + 0.34pct and-2.57pct compared with 2022Q1. The revenue growth rate has improved, but the growth rate is still weak, and the profit growth rate is still weak. It is expected that the main reason for the repeated epidemic in Shanghai in the second quarter is that the operation of enterprises and residents' income in the region have been hit, and the policy promotes financial institutions to reduce fees and yield profits. In this context, the company's scale expansion, asset-end pricing, middle income growth, asset quality and other aspects have been affected to a certain extent. The expected narrowing of spreads and increased provisions are the main factors dragging down performance.

The pace of loan issuance slowed down in the second quarter, and the structure is expected to be mainly to the public; deposits maintain good growth, and the debt structure tends to be more optimized. At the end of June 2022, total assets increased by 4.71% compared with the same period last year, continuing the steady single-digit growth since the second half of 2021. In terms of loans, loans increased by 22.8 billion yuan in the second quarter (VS: loans increased by 69.5 billion yuan in the first quarter), and the pace of release slowed. At the end of June 2022, total loans increased by only 2.81% compared with the same period last year, down slightly from the end of March to 57.35% of total assets. In terms of loan structure, it is expected that in the second quarter, the main investment will be to the public, while the pressure on retail loans is expected to remain large. From the debt side, deposits increased by 153.4 billion yuan in the second quarter (VS: loans increased by 128.1 billion yuan in the first quarter). At the end of June 2022, total deposits increased by 6.31% compared with the same period last year, accounting for nearly 60% of the total liabilities.

The bad continued to decline on a month-on-month basis, and the asset quality maintained a positive trend. The company continues to increase stock risk management efforts, bad continued the month-on-month decline since 2020. At the end of June 2022, the amount of non-performing loans decreased by about 500 million yuan month-on-month; the non-performing loan ratio was 1.56 percent, a decrease of 2bps from the previous month.

The provision of credit impairment is expected to increase in the second quarter. By the end of June 2022, the provision coverage rate will be 158.49%, a substantial increase in 13.69pct compared with the previous quarter. On the whole, the company's asset quality has been further consolidated.

Investment suggestion: the company insists on taking high-quality development as the main line, strengthens the transformation, adjusts the structure, the pressure drop risk, the overall management is sound. Strengthen the leadership of the head office of public business, promote structural transformation and optimization, and achieve remarkable results in the optimization of customer business model; retail business focuses on improving online, differentiated and ecological service capabilities, and promotes the overall scale of retail to a higher level; at the same time, continue to increase risk resolution and disposal efforts, asset quality to maintain a good trend. It is estimated that the growth rate of the company's homing net profit from 2022 to 2023 is 0.7% and 2.0%, respectively, and the BVPS is 1.64 and 21.79 yuan per share, respectively. The current A share price corresponds to the PE of 4.3X and 4.2X in 2022-2023, respectively. Considering the company's PB valuation center and fundamentals in the past two years, we value the company's PB in 2022 at 0.40X. The corresponding fair value is 8.15 yuan per share, maintaining the "buy" rating.

Risk hints: (1) more-than-expected decline in economic growth; (2) significant deterioration in asset quality.

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