This report is read as follows:
Industrial and Commercial Bank of China's quarterly report in 2022 was in line with market expectations, revenue growth remained stable, and profit growth slowed down. The quality of assets has entered the channel of improvement, and the level of provision continues to rise.
Main points of investment:
Investment suggestion: maintain Industrial and Commercial Bank of China's net profit growth forecast for 2022-2024: 10.42%, 8.99%, 8.94%, 1.15, 1.25, BVPS8.87/9.70/10.60. The current price corresponds to 0.54-0.49 PB in 2022-2024. Maintain the target price of 6.95 yuan, corresponding to 0.78 times PB in 2022, and maintain the overweight rating.
Revenue growth remained stable, while profit growth slowed down. Q1 revenue grew 6.5% year-on-year, slightly improving 0.2pc compared with Q4. The main contribution factors are: the expansion speed of ① has increased, Q1 total assets increased by 8.5% year-on-year, growth rate increased by 3.0 PC; ② benefited from better bond market earnings, and other non-interest income increased by 15.5% year on year. The main drag is that ① net interest margin narrowed year-on-year; net income from ② fees grew by just 1.2 per cent year-on-year. Q1's net profit rose 5.7% year-on-year, falling 5.0pc compared with Q4, mainly because credit costs increased 4bp year-on-year.
The amount of loans has not been reduced, but the structure has changed. Q1 loans increased by 10.9% year-on-year, basically maintaining the central position of growth since 2020. However, from the year-on-year situation of single-quarter increment, the structure has changed. Q1 significantly increased the investment of public and bill assets.
The level of provision has increased. The defective rate of Q1 is unchanged at 1.42%, but the level of provision has increased.
Among them, provision coverage increased 4pc compared with the beginning of the year, and loans increased 6bp compared with the beginning of the year. Industrial and Commercial Bank of China's provision coverage has returned to the upward trend since Q4 in 2020, and the center of the bad generation rate has also declined, and the overall asset quality has entered the improvement channel.
Risk hint: the economic downturn is greater than expected; real estate risk exposure is accelerated.