Main points of investment
The growth rate of revenue and return net profit of Pudong Development Bank declined from the previous month; the balance of non-performing loans and the non-performing rate reached a "double decline" for the 11th consecutive quarter, and asset quality showed a trend of stabilization and improvement.
The year-on-year net profit of 22Q1-3 is-2.6% year-on-year, the growth rate is 3.7pc lower than that of 22H1, revenue is + 0.1%, growth rate is 8.92%, year-on-year-75bpterROA is 0.66%, year-on-year-4bp22Q3 end-defect rate is 1.53% compared with Q2, and provision coverage is from-3pc to 155%.
1. Profit slows down. The net profit of 22Q1-3 fell 2.6% from the same period last year, the growth rate was 3.7% lower than that of 22H1, and the operating income increased 0.1% from the same period last year, and the growth rate was lower than that of 1.2pc. The main restricting factors are the downward trend of net interest margin, the increase of business and management fees, and the small fluctuation of scale, credit cost and tax factors.
Specifically: ① spreads are down. 22Q3's quarterly net interest margin (at the beginning and end of the period) fell 6bp to 1.73% lower than 22H1, and its negative contribution to revenue widened from-1.9% of 22H1 to-3.0% of 22Q1-3. The pressure is mainly on the debt side, and the interest-bearing debt cost ratio Q3 rose to 2.25% quarter-on-quarter compared with Q2, mainly due to the increasing trend of fixed deposits. The balance of demand deposits at the end of 22Q3 is-3.6% higher than that at the end of Q2, and the balance of time deposits is + 5.6% at the end of Q2. The competition in the deposit market is becoming increasingly fierce, and the risk preference of customers' wealth management products is declining, returning from high-risk products to high-priced time deposits, resulting in the shrinking of demand deposits and the rapid growth of time deposits. The cost of ② goes up. 22Q3's quarterly billing business and management fees increased by 7.9% compared with Q2, increasing the negative contribution of fees to net profit from-1.1% of 22H1 to-2.9% of 22Q1-3, mainly due to the payment of supervision fees.
Looking forward to the whole year, it is expected that the revenue growth rate of Pudong Development Bank will decline steadily, and the growth rate of return net profit will increase steadily. Mainly based on: ① spreads are still under pressure. The rate of return on interest-bearing assets is expected to remain stable, but the cost ratio of interest-paying liabilities continues to be under pressure. The impact of ② cost is alleviated. The pressure of return net profit caused by one-time fee payment can be alleviated.
2. Asset transformation. The scale of 22Q1-3 interest-bearing assets is + 3.2% compared with the same period last year, and the growth rate is basically stable compared with the downward 0.2pc of 22H1, and the scale growth is still restricted by the pressure drop of retail joint loans. The rate of return on Q3 interest-bearing assets in a single quarter is the same as that of Q2 and slightly better than expected. The new assets of Pudong Development Bank are focused on the Yangtze River Delta region, high-end manufacturing areas represented by integrated circuits, artificial intelligence, biomedicine, and civil aviation. Manufacturing loans, science and technology innovation finance, and free trade finance are all growing at a rate of more than 20%. Asset structure tends to be optimized.
3. Bad stabilization. The non-performing balance at the end of 22Q3 was-800 million yuan at the end of Q2, and the non-performing rate was higher than that at the end of Q2-3bp, achieving a double decline for the 11th consecutive quarter. The asset impairment loss of 22Q1-3 is-1.9% compared with the same period last year, of which the loan impairment loss is-0.9% compared with the same period last year, the real net bad generation rate of TTM is-5bp, and the asset quality is stabilizing and improving.
Profit forecast and valuation
Pudong Development Bank is expected to have a year-on-year increase in net profit from 2022 to 2024-1.00%, 1.67%, 5.88%, corresponding to BPS20.13/21.36/22.68 yuan shares. The current price corresponds to the valuation of 0.33 PB 0.32 plus 0.30 times. The target price is 9.06 yuan per share (after dividend adjustment), corresponding to 0.45 times of PB in 2022, and the current price space is 34%.
Macro-economic stall, bad exposure