The main event Zhangjiagang Bank recently released its annual report: annual operating income of 4.827 billion yuan (YoY+4.57%) and net profit of 1.682 billion yuan (YoY+29.00%).
Profitability continued to shine, with ROE hitting its highest level since 2015. Revenue reached 4.827 billion yuan in 2022, slowing to 4.57% year-on-year growth. The growth rate of net interest income rebounded slightly to 6.11% year-on-year, and the net interest margin for the whole year was 2.25%, the same as that of the previous three quarters, while non-interest income became the main drag (YoY-1.57%), of which the middle income fell by more than 60% year-on-year, mainly due to a significant decline in agency fee income. The net profit for the whole year was 1.682 billion yuan, an increase of 29% over the same period last year, and the growth rate of Q1-Q4 in a single quarter was more than 25%. The annual ROE was 12.21%, up from the same period last year, the highest level since 2015.
The expansion of different places is methodical and the ability to acquire assets is strong. At the end of 2022, the loan balance exceeded 115 billion yuan (YoY+15.24%), and the expansion in different places was orderly. The loan balance of branches in different places was 58.049 billion yuan, accounting for more than 50% of the total loans of the whole bank, which was significantly higher than that at the end of 2021 by increasing 1.4pct. Relying on the developed economy of southern Jiangsu, the "two small schools" have deep roots and luxuriant roots. The number of public and retail customers increased by more than 40% in 2022, and the action of expanding area and increasing households has achieved remarkable results. The micro-loan balances of the small and micro finance division and the small business department are 24.43 billion yuan and 21.15 billion yuan respectively, and the "two small" loans account for 40.68% of all loans.
The growth rate of deposit and loan matches and the debt-side support is strong, but the deposit-to-loan ratio is still high. At the end of 2022, the deposit balance of Zhangjiagang Bank was nearly 140 billion yuan (YoY+15.23%). The bank's local institutional deposit market share was 20.70%, of which the savings deposit market was 34.89%, ranking first among the 34 financial institutions in the city. Affected by the accelerated expansion of deposits, the marginal deposit-to-loan ratio has fallen to 82.41%, but it is still at a high level in the industry. The scissors gap between deposit and loan growth is almost zero. Under the trend of fixed deposits, deposit costs are higher than in the middle of the year 2BP, but companies actively adjust debt costs, interest spreads are expected to remain stable.
The defective rate and concern rate have both dropped, and the provision coverage rate is still higher than 500%. Relying on the "two small" loans with scattered risks, and most of the customers are small and micro enterprises and self-employed in southern Jiangsu, Zhangjiagang Bank has shown excellent risk control ability.
At the end of 2022, the non-performing rate further decreased by 1BP to 0.89% compared with Q3, the concern rate decreased by 9BP compared with the end of Q3, and the stock risk continued to be cleared; the provision coverage rate was closer to 20pct than that at the end of Q3, but still maintained a high level of 521.09%, and the margin of safety was very adequate. As the stock burden is cleared and the increment is identified more strictly, the superimposed "small and scattered" to disperse large risks, the asset quality will continue to be optimized.
Investment advice Zhangjiagang Bank's homing net profit increased year-on-year, ROE rebounded to the highest level since 2015; deposits and loans grew by more than 15%, and the deposit market share ranked first in Zhangjiagang City. Under the "two small" speed racing mechanism, loans continue to grow high, asset quality is stable, and the safety cushion is more adequate. We maintain its "buy" rating.
Risk tips: risks brought by business transformation; stricter regulatory policies; downside risks of economic growth, etc.