Event
On April 29, 2022, Industrial and Commercial Bank of China disclosed the first quarterly report of 2022: 1Q22 realized operating income of 249.5 billion yuan, an increase of 6.5% over the same period last year, and a net profit of 90.6 billion yuan, an increase of 5.7% over the same period last year. The defect rate of 1Q22 is 0.42%, which is flat on a quarter-on-quarter basis; the 1Q22 provision coverage rate is 209.9%, an increase of 4.1pct on a quarter-on-quarter basis, and asset quality meets expectations.
Brief comment
1. Revenue and profits are growing steadily.
Industrial and Commercial Bank of China's 1Q22 net profit increased by 5.7% over the same period last year, which is in line with our expectations. According to the analysis of profit drivers, scale, tax rate, other net income and net fee income contributed 8.4%, 3.1%, 1.7% and 0.22% to Industrial and Commercial Bank of China's profit growth respectively; narrowing interest spreads, provisions and costs contributed negatively to 3.9%, 3.7% and 1.3%, respectively.
1Q22 Industrial and Commercial Bank of China's operating income increased by 6.5% over the same period last year, of which net interest income increased by 6.4% compared with the same period last year; non-interest income increased by 6.8% year-on-year, driven by investment income, and net fee income increased by 1.2%, mainly due to ICBC's fee reduction for small and micro and investment banking business fees, but capital management and credit cards increased year-on-year, rising and falling overall.
two。 The net interest margin fluctuates narrowly, and general public loans are the main force of credit.
The net interest margin of 1Q22 Industrial and Commercial Bank of China was 2.10%, a quarter-on-quarter decline of 3bps.
On the asset side, the rate of return on interest-bearing assets of 1Q22 fell by 20bps to 3.43% on a quarter-on-quarter basis. Structurally, Industrial and Commercial Bank of China's loans rose 4.5 per cent from a year earlier, accounting for a quarter-on-quarter decline of 0.9pct to 57.9 per cent. Among them, loans to public loans increased by 6.1% over the beginning of the year, retail loans increased by 1.5% over the beginning of the year, general loans to public loans grew even stronger, accounting for 79% of the increment, and bills discount accounted for only 8%. The share of high-yielding assets such as loans and bonds rose at the start of the year, and higher yields on overseas assets also brought positive results.
On the debt side, according to the estimated 1Q22 interest-bearing debt cost ratio fell 5bps to 1.63% quarter-on-quarter. Structurally, Industrial and Commercial Bank of China's deposits rose 5.8 per cent from a year earlier, while the proportion of deposits in liabilities fell slightly to 81.3 per cent from a quarter earlier. Among them, demand deposits increased by 3.8% quarter-on-quarter, the proportion of demand deposits in total deposits decreased from 1.5pct to 47.3%; time deposits increased by 10.2%, and the proportion of time deposits in total deposits decreased by 1.5pct to 49.1%.
3. The quality of assets has improved steadily, and the coverage rate of provisions has been further improved.
Industrial and Commercial Bank of China's 1Q22 defect rate was unchanged at 1.42% quarter-on-quarter. According to estimates, the rate of bad production of 1Q22 plus write-off is 0.83%, a decrease of 10bps compared with the same period last year. 1Q22 provision coverage increased further, increasing 4pct to 210% on a quarter-on-quarter basis.
4. Investment advice and profit Forecast
Industrial and Commercial Bank of China reported quarterly results in line with expectations, stable scale growth, narrow fluctuations in interest spreads, and stable asset quality. We expect Industrial and Commercial Bank of China's net profit from 2022 to 2024 to grow by 7.8%, 8.1%, 8.7%, and the current share price corresponds to 0.5 times 22-year PB.
5. Risk hint
The company is mainly faced with the following risks: a sharp macroeconomic downturn, leading to bad bank risks.