Bank of Shanghai (601229) Review of 2019 Third Quarterly Report: Optimization of Negative Capital Structure and Provision of Profits
Core point of view Bank of Shanghai has a clear regional positioning, efficient operation and management, and in-depth development through retail transformation. The company’s long-term sustainable development is expected to receive new support and maintain the company’s “overweight” rating.
Event: The Bank of Shanghai released the third quarter report of 2019. The operating income and net profit attributable to mothers increased year by year in the first three quarters.
76% / 14.
59%, ROA / ROE (1.
04% / 14.
74%) continued the previous improvement trend; the non-performing ratio fell 0 quarter-on-quarter.
01pct to 1.
Provision for back-feeding supported the steady growth of profit in the third quarter, and the ROA / ROE double-up trend remained unchanged.
In the first three quarters, the net profit attributable to the mother was +14 for ten years.
6% (+14 in the first half of the year.
3%), the profit growth rate has been steadily rising, driving the company’s ROA / ROE in the first three quarters to gradually increase (0.
03pct / 0.
1) On the income side, the low base effect has faded and the pressure on interest rate has improved. The single quarter revenue growth rate in the third quarter is expected to reach 7.
2% (27 in the first half).
2) On the expenditure side, the provision of anti-nurturing effect is obvious, and the asset impairment in Q3 was understated for ten years.
7% (+47 in the first half of the year.
8%), which effectively supported the steady growth of profit growth in the third quarter.
Under the beneficial guidance, the optimization of the asset structure was strengthened in the third quarter.
1) On the asset side, we are fully deploying high-yield products, of which Q3 added new loans of 33.2 billion yuan and investment of 17.7 billion under the additional amortized cost, which accounted for an additional 223% of the total asset increase in the quarter.
Market interest rates fell in the third quarter, and relatively low-yielding interbank assets and other investment assets were significantly compressed.
2) At the end of the year, retail business continued to drive growth. Net deposits for the quarter were +34.9 billion, of which personal deposits accounted for 63%.
In addition, in the third quarter, the interbank certificate market picked up, and the company may expect to increase its issuance scale. The issued debt securities increased significantly by US $ 44.4 billion in the quarter.
The growth of net interest income is high, and the pressure on interest payment costs has increased.
In the first three quarters, the company’s net interest income increased by 6 per year.
1%, an increase of 12 over the first half.
0% fell back.
It is obvious that the third quarter is the company’s first quarterly revenue growth rate (+4.
6%) less than interest expense (+5.
3%), broken down: 1) the asset side is stable, the quarterly quarter-on-quarter growth rate of index revenue is basically the same as the previous quarter, and the proportion of high-priced retail loans is expected to strengthen the supporting role;Quarterly +5.
3% compared to last quarter (+0.
93%), with a relatively obvious rebound. It is expected that the relationship with the regularization of deposits will be interrupted, and subsequent changes in the cost of rejection are worthy of attention.
Asset quality was generally stable, and provision coverage continued to be high.
The company’s 19Q3 non-performing rate was 1.
17%, a slight decrease of 0 from the end of the first half.
01pct.Add the impact of spin-out and write-off, and calculate the Q3 single-year bad incidence rate1.
21%, compared with 1 in the first half.
The absolute level of 07% is generally stable.
In terms of provision, the accrual strength was significantly significant, and 杭州桑拿 the asset impairment in Q3 was understated twice.
7% (+47 in the first half of the year.
Provision for the collection price, provision coverage ratio in the third quarter fell slightly from the previous month.
8 points to 333.
4%, but still at a high level.
Risk factors: stalling macroeconomic growth; worse-than-expected retail loan quality deterioration.
Investment suggestion: Bank of Shanghai has a clear regional positioning, efficient operation and management, and in-depth development through retail transformation. Long-term sustainable development is expected to gain new support.
Taking into account the change in the pace of provisioning, the EPS for 2019/20 (attributable to ordinary shareholders) is slightly adjusted to 1.
37 yuan / 1.
54 yuan (previous forecast 1).
The current company evaluation is 0.
87xPB (corresponding to 2019), maintaining the “overweight” rating.