Ping An Bank (000001): Stay tuned for 2019
Event: Ping An Bank disclosed its 2018 annual report. In 2018, it realized operating income of 1167 ‰, an increase of 10.
3%; net profit attributable to mothers was 2.48 million yuan, a year-on-year increase of 7.
0%, as expected.
In the fourth quarter of 2018, the NPL ratio increased by 7bps to 1 quarter-on-quarter.
75%, loans overdue for more than 90 days / non-performing quarter fell 22 substitutes to 97%.
Ping An Bank’s bad inventory problem was resolved in one place in 4Q18, which will serve as an alternative basis for the inflection point of asset quality in 2019.
In the fourth quarter of 2018, Ping An made great efforts to repair the bad overdue scissors, and the bad deviation degree replaced 97%, which was a significant decrease of 22 substitutes in the quarter.
Due to the increase in bad confirmations, the non-performing ratio in the fourth quarter of 2018 increased by 7bps to 1 quarter-on-quarter.
75%, provision coverage ratio fell 14 times quarter-on-quarter to 155%, 4Q18 plus write-off write-offs generated a negative quarterly increase rate of 75bps to 3 quarter-on-quarter.
Initially, despite such vigorous efforts to deal with bad issues, the rate of bad write-offs increased by 20bps to 2 in 2018.
33%, indicating that its new generation has been significantly prominent.
Observed from the potential bad indicators, Ping An has added a lot of high-quality assets, and the bad leading indicators have always been good.
It is expected that both concern and overdue will achieve double decline. Until the end of 2018, Ping An is concerned about the loan rate. The overdue loan rate has dropped by 68 and 59bps to 2 compared with 1H18.
73% and 2.
60%, attention-oriented loans, overdue loans decreased by 13 compared with 1H18.
4% and 12.
At the same time, the overdue situation was significantly exceeded, and loans overdue within 90 days fell by 4 compared with the early period and 1H18.
4% and 12.
2%, 1H18, 2H18 overdue loan generation rates were -14bps and -73bps, respectively.
In our judgment, Ping An Bank is expected to usher in an inflection point in asset quality in 2019, and it will set aside profits for back-feeding. It is worth looking forward to the release of performance.
In 2018, the net interest margin of Ping An Bank improved quarter by quarter, and the defect cost recovery under the wide currency environment is expected to become an important contributor to the 19-year net interest margin.
Ping An Bank’s net interest margin fell by 3bps to 2 each year in 2018.
35%, the decline significantly converged.
In terms of single quarter data, Ping An Bank’s net interest margin increased from 2Q18 to 4Q18 quarter by quarter, and the quarter of 4Q18 increased by 11bps to 2 quarter-on-quarter.
(1) Asset side: Structurally, increasing loan allocation, especially retail loans with high interest rate levels, 2H18 asset side structural factors contributed 21bps to the increase in interest margin.
With the return to the origin of the business and the continuous increase in the proportion of loans, Ping An Bank’s loan end since the end of the retail conversion at the end of the 16-year period of loan resources have been tilted to retail loans, continued to reduce the decline in corporate loans.
As of 4Q18, the proportion of retail loans in the quarter increased further.
5 up to 57.
8%, has basically reached the long-term optimal investment ratio of its loan-end retail to the public six or four open.
In terms of interest rates, lending yields contributed 38bps to the spread.
According to estimates, 2H18 retail loan yield increased by 88bps to 8 compared with 1H18.
29%, the yield on corporate loans slightly increased by 1bp to 4 from 1H18.
We expect that the reason for the rise in retail loan yields may be related to the adjustment of some credit card income from fee income to interest income. By 2018, the total growth rate of bank card fee income will drop from 80% in 1H18 to 36%.
We expect that under the environment of loose liquidity, there is already limited room for marginal upward return on the asset side, but the decline in Ping An 重庆耍耍网 Bank’s loan pricing level, which is dominated by retail loans, will help smaller than peers.(2) Debt side: In terms of inter-bank debt, the inter-bank debt compensation coefficient has changed from negative to positive, and the positive contribution margin in 2H18 is 7bps.
According to the re-pricing structure at the end of 2018, inter-bank denial and response bonds due in 2019 (mainly inter-bank certificates of deposit) accounted for 23% of total liabilities, offsetting the pressure on end-cost costs to promote continued relief.
In terms of deposits, retail and corporate deposits each increased by 38.
4% and 4.
1%, and high-interest structured deposits are the main force of current deposit growth. 42% and 46% of new deposits in 3Q18 and 4Q18 came from this, respectively.
However, the structured deposit interest rate has also declined since the second half of 2018, so the negative contribution of the 2H18 deposit-side interest rate factor to the interest rate differential increased from -14bps in 1H18 to -10bps.
We believe that Ping An Bank’s convertible bonds have been issued smoothly. If the subsequent successful conversion of shares, the re-issuance of public credit will restore the vitality of the growth of public deposits, and the impact of the resistance to the positive interest margin will be more obvious in 2019.Especially the wealth management sector is worth looking forward to.
According to the leader’s presentation on the Group Open Day in October: “Ping An Bank is positioned as the main operating position for Ping An Group’s high net worth customers.
With the support of the Group, the 1200-person wealth management team affiliated to Ping An Trust has been absorbed.
“As of 2018, Ping An Bank’s AUM exceeded 30% to 1.
4 trillion, and since 17 years, the average AUM growth rate has continued to be negative. The average AUM growth rate has increased 9% to 16,887 yuan, and the number of wealthy customers and private banking customers has increased by 29 each time.
6% and 27.
7% of them reached 59 and 30,000 households. In the future, AUM per capita and the number of wealth customers will gradually increase.
We believe that Ping An Bank’s retail business will continue to make efforts in expanding its AUM and private banking business in addition to its flagship products. In the future, high-end wealth management business will become the core of its retail transformation. The retail transformation will further focus on improving the significance.
Company view: It is expected that the improvement of core profitability and the reduction of pressure on credit costs will drive Ping An Bank’s 2019 performance to a new level, the inflection point of asset quality in 2019, and the average value of the recovery of public deposits and the progress of retail conversion in the wealth management sector are expected to remain “buy””Level, re-inflection point combination first.
It is estimated that the growth rate of net profit attributable to mothers in 2019-2021 will be 12 respectively.
3% / 14.
9% / 16.
8% (maintain 19- and 20-year profit forecasts and add 21-year profit forecasts), currently reaching 0 in 19 years.
93X PB, raise target price to 1.
2X 19 PB, 29% upside.
Risk Warning: Severe Economic Downturn Causes Undesirable Risks in the Industry