西部首家“A+H”城商行，业务覆盖“一市三省”，除以重庆本地为核心外，还拓展至成都、西安、贵阳三地，2010 年以来省外存贷款占比呈现出先升、后降、再回升的趋势。与之相对应，2012-2019 年间公司在重庆市的存贷款市占率稳步提升，并在此后大致保持平稳。Introduction to this report:
The Bank of Chongqing has controlled modernization and old in recent years, and asset quality has improved markedly. Currently, there are both the characteristics of typical dividend targets with undervalued and high dividends, as well as positive option bonuses for regional economic recovery. Covered for the first time, a rating for prudent increase in holdings was given.
Summary:
It is the first “A+H” commercial bank in the west. Its business covers “one city and three provinces”. In addition to focusing on Chongqing, it has also expanded to Chengdu, Xi'an, and Guiyang. Since 2010, the share of foreign deposit loans in the province has shown a trend of rising first, then falling, and then picking up. Corresponding to this, the company's share of deposits and loans in Chongqing increased steadily between 2012 and 2019, and has remained generally stable since then.
In mid-2023, the Bank of Chongqing's loan market share in the region was 5.3%, between the two local banks, Chongqing Agricultural Commercial Bank (12.1%) and Chongqing Three Gorges Bank (2.6%).
Asset quality has improved markedly and is stabilizing. The company's early credit risk management capabilities were relatively weak. Since 2013, attention rates and overdue rates have risen sharply due to a slowdown in external economic growth, structural adjustments, and the rapid pace of the company's internal offsite exhibitions and untimely matching of risk control capabilities. In response, the Bank of Chongqing, on the one hand, adjusted its business strategy, contracted offsite business, and further cultivated the mainland. On the other hand, during 2017-2018 and 2021-2022, large amounts of financial resources were used to centrally dispose of them. The average annual bad write-off rate during this period exceeded 130%, and the stock burden was effectively eliminated. Although the defect rate has declined slowly, the attention rate and overdue rate have declined sharply, and the degree of bad deviation has also dropped to less than 1.
Regional economic recovery provides positive options. In 2021, the Chengdu-Chongqing Shuangcheng Economic Zone was officially upgraded to a major national strategy. Subsequently, a new leadership team in Chongqing was established and aggressive growth goals were proposed. Nearly 80% of the Bank of Chongqing's business has landed in Chongqing, which is expected to fully benefit from the steady growth policy and potential recovery of the regional economy. On the one hand, major project planning and construction rates have increased, driving the growth of orders in related industrial chains and providing good support for Bank of Chongqing's credit investment. On the other hand, regional economic recovery is driving improvements in the financial resources of entities and residents, which favors the continuation of the trend of improvement in the Bank of Chongqing's asset quality. Depreciation accruals have declined further, and profitability has increased relatively.
The characteristics of undervaluation and high dividends, and the dividend target is outstanding. Currently, Bank of Chongqing's H share PB valuation is 0.25x, which is already at a historically low level. Compared with the PB valuation of 0.53x A shares, the discount rate exceeds 50%, so there is limited room for further decline. At the same time, the Bank of Chongqing's cash dividend rate has remained high and stable in the past three years. The dividend rate for H shares in 2023 is over 10%, making it a relatively cost-effective investment.
Risk warning: Demand recovery is weaker than expected, dragging down loan volume and price performance; high debt constraints or dragging down the recovery slope of the regional economy; and there is some uncertainty about the quality of retail credit assets.
