Industrial and Commercial Bank of China (601398) Company Dynamics Review: Daxing assumes rock solid asset quality

Industrial and Commercial Bank of China (601398) Company Dynamics Review: Daxing assumes rock solid asset quality

Event: Industrial and Commercial Bank of China released its third quarter performance report, and achieved operating income of 6,469 in 19Q3.

42 ppm, an increase of 12 in ten years.

11%; realized net profit of 2517.

12 ppm, an increase of 5 in ten years.

04%.

The growth rate of profit in the first three quarters increased quarter by quarter.

1Q19, 1H19, 9M19 companies’ net profit growth rates were 4 respectively.

1%, 4.

7%, 5.

0%.

From the perspective of income, the double-digit growth in non-interest income partially replaced the change in the growth rate of index revenue. Last year, the income from intervention fees affected by the new regulations increased by only a few digits. This year’s financial management transition is progressing smoothly.1H19 increased by 8.

From the point of view of expenditure, the company’s supplementary non-performing control is excellent, and the growth rate of provision provision dropped from 30% -40% in 1Q17-3Q19 to less than 20% in 2Q10-3Q19.

The rise in the cost of debt has led to a narrowing of interest margins, but the company remains superior among comparable peers.

3Q19 net interest margin fell 3bp to 2 compared to 1H19.

The reason for the narrowing of interest rate spreads is 26%. The reason for the narrowing of the spread is that the return on the asset side is falling, and the cost on the debt side is rising. The upward and downward trends are slightly different.

The rise in the level of debt interest has expanded to the competition for supplementary deposits. In the first three quarters of this year, the whole society’s supplementary loans increased supplementary deposits, and all institutions have a need to transfer deposits.

At the same time, in the past few years, bank funds were injected into other financial systems and Internet financial companies. After the new rules on asset management, disintermediation funds will undergo a large-scale reorganization, but they will gradually return. It is normal for banks to increase debt costs when they accept these funds.

In the future, the trend of net interest margin may be a downward trend, but the company 夜来香体验网 will consider peer benchmarking, and the interest payment level will remain better among comparable peers.

Negative generation is controlled at a low level, and the correlation between improvement in asset quality and the decline in macroeconomic decline.

Non-performing rate in the third quarter of 19

44%, down 4bp from 2Q19.

We estimate that the net annual generation rate of non-performing 3Q19 single season is still 0.

Below 6%, the lowest level in 15 years.

The correlation between the improvement of ICBC’s asset quality and the macroeconomic downturn is weakening because of the adjustment of ICBC’s credit structure in these years, the reduction of loans to low- and mid-end manufacturing, loans to high-end manufacturing, personal mortgage loans, and loans in some emerging areasThere has been an increase, a better credit structure layout, and the use of big data fintech methods, and the use of new processes, new systems, and new products to control and increase the quality of loans.

Provision coverage ratio in the third quarter of 198 was 198.

09%, up 6pct from the previous month.

Investment suggestion: ICBC’s fundamentals are very stable with a dividend yield of 4.

4%, excellent asset quality performance, 0.

8x20PB is seriously underestimated.

In the environment where the market’s risk-free interest rate is low, it is suitable for incremental domestic funds that are pursuing stable returns. From a global perspective, the ROE of banks with equivalent foreign valuations is not as good as ICBC. Under the background of more and more stock allocation, ICBC is also facing heavyestimate.
We expect ICBC’s net profit to grow by 5 per year in 2019/2020.

twenty four.

6%, maintaining the “highly recommended” rating.

Risk Warning: Deteriorating asset quality due to unexpected economic downturn.