The scale growth is accelerated and the asset quality is stable.
January-March homing net profit, revenue, PPOP + 5.7%, + 6.5%, + 5.2% (2021:
(+ 10.3%, + 6.8%, + 5.4%), the growth rate of revenue is relatively stable, while the slowdown in net profit growth is mainly due to prudent provisions and the month-on-month rise in credit costs. The main concerns include the accelerated growth of scale, the rapid release of credit, the good growth of other non-interest income and the sound quality of assets. In view of the steady growth in revenue, we maintain a forecast of RMB 1.05 EPS 1.12 PB for 22-24, RMB 8.90 for 22-year BVPS and 0.54 PB for A-share / H-share. In view of the firm leading position of the company, we should enjoy a certain valuation premium over the 22-year average Wind consensus expectation of A-share / H-share comparable companies (0.50 PB). We give A-share / H-share 0.75 PB 0.572 times the 22-year target PB, maintain the A-share price of RMB6.68 and H-share price of HK $6.03, and maintain the "buy" rating.
The scale growth has accelerated, the public investment has been supported, and the spread has dropped slightly compared with the previous month.
From January to March, the net interest income was + 6.4% compared with the same period last year, which was basically stable compared with 21 years, and the scale growth was the main supporting factor. At the end of March, total assets, loans and deposits were + 8.5%, + 10.9% and + 7.8% respectively compared with the same period last year, and the scale maintained rapid growth. The growth rate of total assets and deposits was faster than that at the end of 21 years, respectively, and the growth rate of loans was stable at a faster level. Public loans accounted for nearly 87% of the new Q1 loans. At the end of March, public loans and retail loans were + 11.7% and + 9.6% respectively compared with the same period last year. Public loans are the main support for the steady release of credit, and are expected to benefit mainly from increased investment in key areas such as infrastructure and entities.
The deposit demand rate fell slightly to 46.7% at the end of March from the end of 21 years. Q1 net interest margin is slightly lower than 21 years 1bp, we estimate that it is mainly due to the asset-side pricing decline, while debt-side costs remain relatively stable.
The growth rate of middle income is stable, and the growth of other non-interest income is good.
From January to March, intermediary business income is + 1.2% year-on-year (+ 1.4% year-on-year growth rate in 21 years), which is still expected to be affected by factors such as fee reduction and the epidemic situation. The proportion of intermediate business income in revenue is 16.7% higher than that in 21 years + 2.6pct. Other non-interest income + 15.5% year-on-year, the growth rate compared with 21 years increased 1.8pct, driving revenue growth. The cost-to-income ratio of January to March compared with the same period last year-0.2pct to 17.4%. From January to March, the annualized ROE and ROA reached 12.22% and 1.01% respectively compared with the same period last year-0.43pct and-0.01pct.
Stable asset quality, prudent provision and capital strength improvement
At the end of March, the non-performing loan ratio and provision coverage rate were 1.42% and 210% respectively, which were the same as at the end of 21 years and + 4pct. We estimate that the annual bad generation rate of Q1 is 0.85%, which is higher than the low point of 21Q4 by 0.57pct to 0.85%, but still remains at a low level, and the new generation risk can be controlled. Compared with the low point of 21Q4, the annual credit cost of Q1 increased by 0.88pct to 1.34%, while it was relatively stable compared with the same period last year, and the asset impairment loss was + 12.4% compared with the same period last year. In the context of the rising uncertainty of the economic environment, it maintained a prudent and steady provision and improved its ability to resist risks. At the end of March, the capital adequacy ratio and approval ratio were higher than + 0.23pct and + 0.12pct to 18.25% and 13.43% respectively at the end of 21 years.
Risk hint: the duration of the economic downturn is longer than expected, and the deterioration of asset quality is higher than expected.