Incident has released its 2022 annual report.
Profits returned to double-digit growth, and credit costs fell. In 2022, the company's operating income was 66.276 billion yuan, the same as the previous year; the net profit of the mother was 24.76 billion yuan, up 11.4% year on year; ROE (weighted average) was 9.6%, and the basic EPS was 1.02 yuan. Affected by the easing of the pressure to calculate impairment and the decline in credit costs, the company achieved a double-digit increase in profits. In 2022, the company's credit depreciated 20.847 billion yuan, down 11.37% from the previous year; credit costs were 0.76%, down 0.09 percentage points from the previous year.
The momentum for capital growth is strong, and the structure has been optimized. In 2022, the company's net interest income was 51,458 billion yuan, an increase of 0.12% over the previous year; the net interest spread was 1.76%, down 7BP from the previous year. The momentum for asset side expansion is strong, the structure is optimized, and the characteristics are outstanding. By the end of December, the company's total assets and loan balances were 3.39 and 1.8 trillion yuan, up 10.76% and 7.42% from the beginning of the year. Among them, retail loans increased by 41.2%, and the increase in high-yield consumer loans and operating loans accounted for 124% of retail loans, driving the yield of individual loans to 5.48%. Public loans are skewed towards key areas, and specialized services for customer segments continue to be strengthened. The balances of science and innovation finance, cultural finance, and public green loans increased by 23.35%, 14.83%, and 132.01%, respectively, from the beginning of the year. The increase in debt-side deposits was the highest in history, their share increased, and the cost advantage increased. By the end of December, the company's deposit volume was 1.91 trillion yuan, an increase of 12.59% over the beginning of the year, and the share of deposits rose to 62.2%. The growth rate of personal deposits exceeded 20%; the cost ratio of interest payments and debt equalization fell 13BP from the beginning of the year.
China Revenue maintained relatively rapid growth. Retail and wealth management continued to gain strength. In 2022, the company's non-interest income was 14.818 billion yuan, down 0.4% from the previous year; the intermediary business revenue was 7.066 billion yuan, an increase of 17.96% over the previous year. Among them, the agency and commission business achieved fees and commission revenue of 5.615 billion yuan, an increase of 33.85% over the previous year.
Among the main types of business, income from financial management increased 47.3% year on year, and income from consignment insurance increased 44.7% year on year. By the end of December, retail aum reached 974.94 billion yuan, an increase of 10.23% over the beginning of the year, and private aum increased 18.88% from the beginning of the year. Other non-interest income declined. In 2022, the company's other non-interest income fell 12.78% year over year, and investment income (including profit and loss from changes in fair value) fell 12.09% year over year.
Asset quality was steady and improving. By the end of December, the company's non-performing rate was 1.43%, down 0.01 percentage points from the beginning of the year; the provision coverage rate was 210.04%, the loan ratio was 3.0%, and it had sufficient risk compensation capacity.
The company takes the initiative to carry out countercyclical adjustments, continuously strengthens risk management and control throughout the process, continuously optimizes asset structure, business structure and customer structure, continuously improves the efficiency of disposal of non-performing assets, accelerates the empowerment of digital transformation, and improves asset quality steadily, and the long-term positive trend is more solid.
The investment recommended that the company deeply cultivate the Beijing region, insist on leading the five major transformations of “development model, business structure, customer structure, operation capacity, and management methods” through digital transformation, and release results. Asset-side inclusive, green, science, innovation, and cultural finance loans are growing rapidly. Retail is dominated by consumer loans and operating loans, and comprehensive financial services for children are deployed, with great potential for development and increased revenue contributions; the ability to obtain core deposits on the debt side has increased, and costs have been reduced. With the opening of a financial management subsidiary, the company continues to build a large wealth management platform and expand the income space for light capital. Combining the company's fundamentals and stock price elasticity, we gave a “recommended” rating. The 2023-2025 BVPS was 11.73/12.62/13.58 yuan, corresponding to the current stock price PB0.38X/0.35X/0.33X.
Risks suggest the risk that macroeconomic growth falls short of expectations and that asset quality will deteriorate.