Depth * Company * Bank of Jiangsu (600919): Optimization of the balance of assets structure
Bank of Jiangsu is located in the economically developed Yangtze River Delta region. Its business is based in the province, and its service network radiates the three economic circles of the Yangtze River Delta, the Pearl River Delta, and the Bohai Rim to achieve full county coverage in Jiangsu Province.
The company vigorously develops retail and small and micro businesses. Under the background of optimized asset structure and improved interest margin, profitability has improved significantly.
Benefiting from the regional economic advantages and the improvement of risk control capabilities, the company’s asset quality performance is better, the provisioning base is thickened, and the risk resistance ability is 武汉夜生活网 enhanced.
The first coverage was given an overweight rating.
The key points of the support level rely on the geographical advantages to deeply cultivate the local market.
Bank of Jiangsu was established in 2007 and was established by merger and reorganization of ten city banks. It is the only provincial-owned bank in Jiangsu Province.
As of the end of the first quarter, the company’s total assets reached 2 trillion yuan, second only to Bank of Beijing and Bank of Shanghai, ranking third among city commercial banks.
The company is located in the economically developed Yangtze River Delta region. Its business is based in the province, and its service network radiates the three economic circles of the Yangtze River Delta, the Pearl River Delta, and the Bohai Rim to achieve full coverage of counties in Jiangsu Province.
The company adheres to the market positioning of serving small and micro enterprises, and will provide loans to small and micro enterprises at the end of 20183.
30,000 households with a loan balance of 3635 trillion and a credit balance of 546 trillion for inclusive small and micro enterprises with a credit of less than 10 million yuan, achieving “two increases and two controls”.
The optimization of the asset structure has promoted the improvement of the interest margin.
The company’s debt-side market-oriented funds account for a relatively high proportion. The rise in the market’s cash rate since 2017 has dragged down the performance of the difference, and the company’s net interest margin is at the same level as the industry.
However, since the second half of 2018, the cost pressure on the debt side has been reduced in a wide monetary environment. At the same time, the company has optimized the structure of its capital and liabilities, and the accumulation of the debt side has achieved more and more growth, which has increased the proportion of liabilities; small and micro assets and consumptionThe rapid growth of loan development has led to the improvement of loan yields and jointly promoted the improvement of interest spreads. In the first quarter (after the impact of I9 was restored), the interest spread was 1.
85% (vs 2018 1.
Considering that the market interest rate remains relatively low and the optimization of the asset structure, we believe the company’s net interest margin is expected to further improve.
The asset quality performance is relatively good, and the ability to offset risks is strengthened.
The company’s first quarter non-performing income1.
39%, concerned about the loan rate2.
26%, basically the same as the initial stage. Thanks to the location advantage, the company’s asset quality performance is better.
At the end of 18, the overdue loan rate was only 1.
In recent years, the company’s credit structure has been adjusted, the proportion of retail credit that has been less affected by the economy has increased, the proportion of loans in industries with higher NPL ratios has decreased, and its risk control capabilities have been continuously strengthened.
Against the background of improving asset quality, the company’s provisioning base increased, and the provision coverage ratio / loan-to-loan ratio in the first quarter increased by 6 earlier.
9pct / 8BP to 211% / 2.
We estimate that the Bank of Jiangsu’s EPS for 2019/2020 will be 1.
49 yuan, corresponding to a net profit growth rate of 14.
8% / 14.
5%, which currently corresponds to zero net subsidies in 2019/2020.
68x, corresponding to a P / E ratio of 5.
93x, for the first time, gives an overweight rating.
The main risks faced by the rating were that the economic downturn exceeded expectations, and strict financial supervision exceeded expectations.