Investment points: Industrial and Commercial Bank of China 22Q1 profit growth rate of more than 5%, the future debt side price decline to help stabilize the net interest margin, service fee net income to remain stable in the volatile market, asset quality remains stable, maintain the "better than the market" rating.
The growth rate of homed net profit is more than 5%. 22Q1's operating income increased by 5.95% compared with the same period last year, and its net profit increased by 5.72% compared with the same period last year. The core tier one capital adequacy ratio increased by 12bp to 13.43 per cent from the end of last year.
The decline in debt-side prices in the future is expected to stabilize the net interest margin. We estimate that the 22Q1 net interest margin fell slightly from the previous quarter. Combined with an increase of 87.1% in the contribution to public loans (including bills), we believe that this reflects the reduction of financing interest rates by large banks to support the real economy. Customer deposits accounted for more than 82% of total liabilities. We expect that with the implementation of the deposit interest rate ceiling, debt-side costs are expected to fall to maintain a stable net interest margin.
The net income of poundage remains steady in the volatile market. Net income from fees and commissions increased by 1.22% over the same period last year, basically stabilizing from 1.38% for the whole of 21 years. We expect the fees related to Industrial and Commercial Bank of China's wealth management business to remain robust in the volatile market.
The quality of assets remains stable. The defective rate of 22Q1 was 1.42%, the same as at the end of last year. The provision coverage rate is 209.91%, an increase of 4.07pct over the end of last year.
Investment advice. We predict that the EPS from 2022 to 2024 will be 1.01,1.09,1.17 yuan, and the growth rate of net profit will be 7.32%, 7.36% and 7.35%. According to the DDM model (see Table 2), we get the reasonable value of 5.89 yuan; according to the PB-ROE model, we value the company's 2022E PB at 0.68 times (the comparable company is 0.53 times), and the corresponding reasonable value is 6.03 yuan. Therefore, the reasonable value range is 5.89-6.03 yuan (corresponding to 2022 PE 5.81-5.95 times, peer companies corresponding to PE 4.59 times), maintaining the "better than the big market" rating.
Risk hints: the solvency of enterprises has declined, asset quality has deteriorated significantly, and major changes have taken place in financial regulatory policies.