Changshu Bank (601128)： The asset quality of small and micro benchmarking banks remains relatively good
Changshu Bank (601128): The asset quality of small and micro benchmarking banks remains relatively good
Event: Recently, Changshu Bank disclosed 1H19 results: revenue 31.
2.1 billion, a year-on-year increase of +13.
63%; net profit attributable to mother 8.
540,000 yuan, a year-on-year increase of +20.
As of the end of June 19, the scale of assets was 1758.
5.8 billion yuan, with a non-performing loan ratio of 0.
Opinion: Small and micro benchmarking, adopting investment management-type rural banks for expansion in different places. Changshu Bank is a small and micro benchmarking benchmark close to the capital market. The recognized earnings growth rate continues to lead the listed rural commercial banks.
M & A of investment-managed village and township banks to achieve off-site expansion, off-site replication of small and micro credit models, and solve problems such as future growth ceilings.
As of 1H19, there were 30 village and town banks, 83 village and town bank branches and branches, covering 37 counties in 4 provinces, and a total loan of 147.
2 billion, accounting for 14.
2%; 1H19 rural bank net profit 1.
The successful approach of Changshu Bank lies in relying on the account manager’s understanding of small and micro customers to achieve a higher loan interest rate and a very low non-performing ratio. ROE resides at the forefront of listed rural commercial banks.
However, its localized IPC micro-credit technology relies on account managers. At the end of 2018, the parent bank and its subsidiaries had 5,563 employees, far more than commercial banks of the same size, resulting in a high cost-income ratio.
The growth rate of profit before provision decreased, and the net interest margin improved by 1H19 revenue / profit before provision / net profit increased by 13.
6% / 11.
5% / 20.
2%, the growth rate of net profit is basically close to 1Q19, while the profit growth rate before provision is more obvious, and the pressure of high profit growth is looming.
Earnings growth mainly comes from scale expansion and improvement in interest margin.
1H19 net interest margin 3.
03%, up 16BP per year.
This is mainly due to the decline in the cost of credit as a result of falling market interest rates, while the return on assets remains relatively stable.
1H19 deposit cost ratio 2.
20%, a year increase of 20BP, increase bandwidth.
1H19 yield on public loans5.
75%, down from the previous month; personal loan yield is 7.
96%, staying high.
With the economic downturn and policy-led corporate loan interest rates down, 上海夜网论坛 net interest margins are expected to narrow slightly, in line with industry trends.
Asset quality remained outstanding, and earlier provisioned asset quality remained outstanding.
1H19 NPL ratio is 0.
96%, down 3BP earlier; pay attention to the loan ratio1.
72%, a decrease of 36BP from the beginning of the year; overdue loan rate was 0.
87%, an earlier decline of 32BP; future asset quality concerns are relatively small.
1H19 bad net production rate 1.
07%, a slight increase in the past, in line with industry trends and economic trends.
Provisions are looser.1H19 loan-to-loan ratio of 4.
35%, down slightly earlier; provision coverage ratio was 453.
53%, long-term provision, ability to resist risks.
Investment suggestion: small and micro benchmarking, maintain buy rating. We believe that Changshu Bank is a small and micro benchmarking. Its model has gradually changed the test of the market, and the average loan amount per household is very small.Low and little impact.
Consistent with industry trends, we expect that its net interest margin will narrow slightly, and high earnings pressure is emerging.
We will forecast the net profit growth rate of 19/20 before the forecast of 21.
0% / 20.
8% down to 17.
6% / 14.
Maintain BUY rating and target assessment1.
6 times 19-year PB, corresponding to a target price of 9.
55 yuan / share.
Risk reminders: regional economic risks; interest rate policy control of small and micro loans.