On the first trading day of February, the Shanghai and Shenzhen stock markets of a shares opened flat and went higher. The market sentiment was relatively active, with tourism stocks leading the rise in the morning. The leading stock, China Zhongmian (601888. SH), once rose by more than 7%. Banking stocks led the upward attack in the afternoon, while Ping An Bank, Shanghai Pudong Development Bank and Huaxia Bank rose by more than 4%.
Since the beginning of the year, banking stocks have ushered in a performance pre joy. On the evening of January 8, Bank of Shanghai (601229. SH) released the first performance report of listed banks in 2020, with double-digit growth in assets and loan scale. Since then, a number of listed banks have released performance express. According to the statistics of times weekly, as of January 31, 17 banks have released their 2020 performance express. Except for the net profit of Shanghai Pudong Development Bank (600000. SH), which dropped slightly by 0.99% year-on-year, the net profit of 16 listed banks all increased and the asset quality continued to improve.
Stimulated by good news such as bank performance express exceeding expectations, A-share banking sector broke out significantly recently. On January 15, the banking sector index rose by more than 4.5%, Industrial Bank (601166. SH), China Merchants Bank (600036. SH) and Ping An Bank (00000 1. SZ) all rose by more than 8%, and postal savings bank (601658. SH) rose by the limit for a time and ended up 8.37%.
According to the data of tonghuashun, from January 11 to 29, Ping An Bank had the largest cumulative increase, reaching 16.32%; during the same period, Wuxi Bank (600908. SH), postal savings bank and Industrial Bank of China followed closely, with cumulative increases of 15.53%, 14.41% and 13.68% respectively. In addition, Bank of Changsha (601577. SH) and Bank of Chengdu (601838. SH) also rose more than 10%, up 10.85% and 10.73% respectively.
The mainstream view of the market holds that there are two reasons for the continuous rise of the banking sector: on the one hand, with the continuous economic recovery, the improvement of the banking business environment, the bank performance exceeding expectations, and the valuation of the banking sector to a very low level in history; on the other hand, under the negative impact of the epidemic in 2020, the banking sector basically did not show a big rise in the whole year, and the demand for make-up is strong.
In addition to the banks’ performance express, the market also continued to release good news to stimulate the rise of the banking sector.
On January 30, he bin, assistant general manager of Wuhu Branch of Bank of communications, told the times weekly that the growth of the banking sector in 2020 is limited. With the recent market situation getting better, the banking sector has a certain rise, which also reflects the concept of value investment. The banking sector should have certain investment opportunities when the whole market is going up, focusing on the leading joint-stock banks in the industry and urban commercial banks in some economically developed areas.
Behind the performance exceeding expectations
Specifically, among the 17 listed banks that have released performance express, there are 5 joint-stock banks, 5 urban commercial banks and 7 rural commercial banks. In terms of net profit index, China Merchants Bank temporarily ranked first, recording a net profit of 97.342 billion yuan, an increase of 4.82% over the same period last year; the net profits of Industrial Bank and Shanghai Pudong Development Bank were 66.626 billion yuan and 58.325 billion yuan, an increase of 1.15% and – 0.99% over the same period last year respectively; while the net profits of other 14 banks such as China CITIC Bank (601998.sh) did not exceed 50 billion yuan.
On January 31, Dong ximiao, chief researcher of Zhaolian finance, told the times weekly that the bank’s net profit is growing in line with expectations, and the bank’s stock performance is closely related to the macro economy. The recovery of macro economy and the gradual improvement of bank performance are normal performances. The important reasons for this phenomenon are: in 2020, the banking industry will increase its support for the real economy, and the credit supply will be unconventional. The main source of bank profit is interest margin income, so the growth of revenue and net profit is in line with market expectations.
According to the data of tonghuashun, among the 17 banks that have published the 2020 performance express, the largest increase in net profit is Xiamen Bank (601187. SH), which was listed on October 27, 2020. According to the performance bulletin, in 2020, Xiamen bank achieved operating revenue of 5.526 billion yuan, a year-on-year increase of 22.55%; operating profit of 1.841 billion yuan, a year-on-year increase of 5.62%; net profit attributable to shareholders of 1.823 billion yuan, a year-on-year increase of 6.55%.
In terms of revenue, except Zijin Bank (601860. SH) and Jiangyin Bank (002807. SZ) decreased by 4.24% and 2.38% respectively, the other 15 listed banks achieved year-on-year growth. Among them, Xiamen bank, Jiangsu Bank (600919. SH), industrial bank and Wuxi bank all had a year-on-year revenue growth rate of more than 10%, which were 22.55%, 15.68%, 12.04% and 10.06% respectively; there were 5 listed banks with a revenue growth rate of 5% – 10%, and 6 banks with a revenue growth rate of less than 5%.
In terms of asset quality, the non-performing loan ratio of the Bank of Shanghai increased by 0.06 percentage points to 1.22%, while the non-performing loan ratio of the remaining 16 banks decreased in 2020. Among them, the non-performing loan ratio of Shanghai Pudong Development Bank was 1.73%, down 0.30 percentage points, with a significant decline.
On January 31, Li Fengwen, a researcher of Beijing read Research Institute, told the times weekly that it is not difficult to see from the recent performance of several listed banks that the bank performance in 2020 is still relatively ideal, and the non-performing loans show a trend of “double decline”, which is not as pessimistic as people think, and the bank operation is improving.
After the banks successively released their 2020 performance reports, the bank’s share prices also responded. On January 14, industrial bank and China Merchants Bank successively disclosed the performance express of 2020, and both reported good results. The next day, the stock market opened, and the banking sector rose sharply. As of the close of the day, the banking sector rose by 2.22%, 37 stocks rose, Industrial Bank rose by 6.37%, and China Merchants Bank rose by 4.26%.
Since the beginning of the year, the stock prices of several banks have reached record highs. On January 15, China Merchants Bank rose 4.26%, reaching an intraday high of 53.89 yuan, a record high; on January 18, Industrial Bank rose 6.61%, reaching an intraday high of 24.38 yuan, a new record for its share price. In addition, Ping An Bank, Bank of Ningbo (002142. SZ), Bank of Hangzhou (600926. SH) and postal savings bank also reached a record high in January.
There is uncertainty in operation this year
As the valuation still has room to improve, many institutions also began to buy bank stocks.
According to the latest equity disclosure of the Hong Kong stock exchange, on January 15, the postal savings bank obtained an additional 83.54 million shares from Himalaya capital, involving HK $447 million at a price of HK $53479 per share. This is the second position increase after Himalayan capital increased its holdings of Postal Savings Bank H shares on December 19, 2020. So far, Himalayan capital under Li Lu has held 6.42% of the total H share capital of postal savings bank.
According to the announcement of Penghua China Securities Exchange Bank’s index Securities Investment Fund (LOF), which was listed on January 18, Shenzhen Linyuan investment, at the helm of Linyuan, appeared in the list of the top ten market holders, holding 23.4497 million shares, accounting for 1.71%. It is worth noting that Lin Yuan said publicly at the snowball carnival that he should never buy banks and other eliminated industries, but now he quietly bought bank funds.
On January 25, Xingquan Hurun hybrid fund, managed by star fund manager Xie Zhiyu, issued a listing announcement. According to the announcement, Xie Zhiyu significantly increased his position in Industrial Bank in January, with a capital of nearly 1 billion yuan. At present, Xingquan Hurun holds 47.4341 million shares in Industrial Bank, with a market value of 4.59% of the net asset value of the fund. Industrial Bank has become the fourth largest position stock of Xingquan Hurun.
Li Fengwen said that the new policy on real estate loans issued by the central bank and the China Banking and Insurance Regulatory Commission has promoted banks to better return to the origin of serving the real economy, promoted the healthy development of the real economy, and made banks operate more steadily. At present, many bank shares have fallen below the net value, and the banks are in a long-term stable operation state, and the dividend is high, so the bank shares have a good long-term investment value.
Zhao Huan, former chief financial analyst, said there were many opportunities for the banking sector to follow up. Previously, the market was relatively cautious about the regulatory pressure and performance expectations of the banking industry, but with the disclosure of performance, most of them will exceed the expectations, and the market expectations are constantly repairing. It is expected that the whole banking industry will achieve rapid growth in performance in 2021. Compared with the current plate valuation is low, the future banking industry is also an industry that investors can add.
Market participants generally believe that China’s economy reversed its V-shape last year and is expected to achieve a higher level of growth this year under the condition of a low base. At the same time, the momentum of economic recovery has not yet exhausted. The banking sector has pro cyclical characteristics, that is, when the economy is strong and the interest rate is rising, the banking stocks usually have a better performance.
On January 31, Hu ZhouJie, general manager of Anhui investment research department, analyzed to the times weekly that the improvement of bank stock performance is closely related to the macroeconomic trend. In his view, with the further recovery of the overall domestic economy, the fundamentals of banking stocks will be better than that in 2020, “high quality banking stocks are still worth holding.”.
The new housing loan policy will become an uncertain factor affecting the scale and profit of banks. Recently, Beijing, Shanghai, Guangzhou, Shenzhen and other places have seen a collective rise in mortgage interest rates, tightening the quota.
The reporter of the times weekly learned that, among them, the interest rate of the first housing loan of the four major banks was adjusted to LPR + 55bp, and that of the second housing loan was LPR + 75bp. Before that, the first housing loan was LPR + 40bp, and the second housing loan was LPR + 60BP. After the change, the interest rate of the first housing loan and the second housing loan were 5.2% and 5.4% respectively, and the previously generally implemented interest rates were 5.05% and 5.25%.
According to Yang Rong, an industry analyst of China CITIC construction investment bank, according to the data of listed banks, a total of 750 billion yuan of mortgage loans will be needed in the next four years. The scale of pressure drop of big banks and joint-stock system is larger, and the scale of pressure drop of mortgage is 300 billion yuan and 420 billion yuan respectively. According to Yang Rong’s calculation, at present, the mortgage proportion of CCB is 34% (the upper limit is 32.5%), which needs to reduce the pressure by 1.5%. Statically, it needs to reduce the mortgage loan by 240 billion yuan, the rectification period is two years, and it needs to reduce 120 billion yuan every year.