Changshu Bank (601128) Semi-annual Report Commentary: Grain and grass redundant development
Changshu Bank’s performance maintained high growth.
Net profit in the first half of the year increased by 20.
2%, the main driver of profit growth comes from the increase in interest rate net income14.
8%, the relative savings in impairment losses also positively contribute to performance.
Rebuilding a Changshu strategy continued to make breakthroughs, and village and township banks resumed growth, alleviating market doubts.
(1) Regarding the area of loan investment, the proportion of Changshu region continued to decline. The proportion of regions other than Changshu in Jiangsu Province continued to increase. The strategy of rebuilding a Changshu in branches and village banks in other places continued to make breakthroughs.
(2) In the second quarter, loan provision accelerated, and the rural banks with negative growth in Q1 loans resumed growth, eliminating the market’s pressure on the growth of rural banks.
(3) Loan investment, the speed of public debts extended in the first half of the year, personal loans maintained the speed of personal business loans, mortgage issuance was the best, credit cards and consumer loans were slightly compressed.
In terms of debt, deposits are growing well, and savings deposits are growing better than corporate deposits.
The company’s pressure on high-cost interbank debt dropped by 8.2 billion in the first half of the year.
In terms of pricing, NIM 3.
03%, a 16bps increase a year, but a decrease from the previous quarter.
Net interest margin continued to increase due to an increase of 2bps in the pricing of interest-earning assets, and a decline in the cost of interest payment rejection by 9bps.
However, compared with the previous quarter, the interest margin has narrowed compared with the second half of the year. The loan pricing pressure has been extended, and restructuring has increased the deposit interest rate by 20bps.
Asset quality remains good.
Adverse consequences 0.
96%, provision coverage rate of 453.
Concerned categories accounted for a decrease of 0 compared to the end of the previous year.
4 pieces to 1.
7%, the proportion of non-performing loans overdue for 90 days continued to increase, and the potential for non-performing loans continued to improve.
Our estimated TTM bad net generation rate remains at zero.
The highest level of 49%, the loan credit cost in the first half of the year was 1.
The company’s asset quality continues to maintain a good level, and the ratio of provision levels is comparable to that of a cracked safety mat in the industry. In the future, credit costs will also be relatively stable due to the replacement generation rate. Savings in impairment will provide sufficient positive contributions to profit growth.
In terms of capital, in the first half of the year, Changshu’s convertible bonds successfully completed the conversion, which further consolidated the company’s capital. The capital accumulation rate in 19Q2 and the core tier 1 capital strength rate were 14 respectively.
95% and 12.
We slightly adjusted the company’s profit forecast. It is expected that the company’s EPS in 2019 and 2020 will be 0.
65 yuan and 0.
78 yuan, the final net asset is expected to be 6 at the end of 南京夜网 2019.
08 yuan, calculated at the closing price of 2019-8-27, the corresponding PE in 2019 and 2020 are 12 respectively.
1 and 10.
1x, corresponding to 1 at the end of 2019.
We maintain our prudent overweight rating on the company.
Risk warning: Asset quality fluctuates more than expected, and scale expansion is less than expected