Industrial Bank (601166): Balance Sheet Reshapes Interest Spread and Improves Expectation

Industrial Bank (601166): Balance Sheet Reshapes Interest Spread and Improves Expectation

Investment points: The company’s interbank and financial market businesses have a higher proportion and are more sensitive to market-based interest rates.

  The scale of non-standard investment business of companies with strong regulatory environment continued to decline, and the cost rate of interbank business rose rapidly.

  The market fund interest rate has fallen behind, and it is expected that the pressure on the company’s interbank debt will ease.

The proportion of the company’s deposit and loan business has continued to increase, while the pressure on the overlapping debt side has eased, and the spread can be expected to increase.

  Bank platform: Break the dependence on physical outlets and obtain stable interbank funds.

The company provides agency business support and output of technical income for small and medium-sized financial institutions through the “Bank-Silver Platform”. At the same time, the company sells financial products on the “Bank-Silver Platform”, extending the shortfall in the reduction of physical outlets combined by sales channels and achieving relative stabilityInterbank settlement funds.

There are a total of 38,232 Industrial Bank outlets + silver-bank platform connection outlets, which are layered on the physical outlets of Industrial Bank with more than four major banks.

  The market fund interest rate dropped to a high point, and it is expected that the pressure on the company’s interbank debt will ease.

Under strong supervision, the asset side and debt side of the company’s interbank business were affected.

The company continued to reduce non-standard investment and interbank business. In 2017, interbank assets decreased by 1,009 trillion, and non-standard assets decreased by 4,493 trillion.

The size of non-standard investments such as wealth management products, trusts and other income rights for the 18 years decreased by 4638.

2.6 billion.

High-cost peer resistance will expire and be replaced in 19 years.

As of December 31, 2018, the company’s peers denied that the average weight of repricing in the three months was 83.

24%, the proportion of interbank debt due within 3 months to 1 year is 16.

18%.

The marginal impact of regulation has fallen, and we expect 19-year interbank interest rates to remain at the lowest level.

Interbank interest rates fell, which helped improve the cost of interbank debt.

  The asset defect structure has been continuously optimized, overlapping interbank businesses have bottomed out, and interest margins have increased.

The proportion of the company’s interbank and financial market businesses far 杭州夜网论坛 exceeds that of other banks, and the company is more sensitive to the marketization of interest rates.

The proportion of deposits and loans in the last three years has continued to increase, and the proportion of loans in interest-earning assets has continued to increase.

From the balance sheet in recent years, the proportion of loans in total assets has been increasing.

The proportion of loans from 2016 to 2018 was 34.

3%, 38.

3% and 44.

1%.

The proportion of deposits in liabilities has also continued to increase. The proportion of deposits from 2016 to 2018 was 47.

9%, 52.

7% and 54.

3%.

The proportion of the company’s traditional deposit and loan business continues to increase. We believe that it will help reduce the impact of market interest rate fluctuations on interest rates. At the same time, overlapping 西安耍耍网 interbank interest rates will decrease, and the pressure on the debt side will ease.

  Promote transformation and development with the strategy of “commercial bank + investment bank”.

Create value for customers through integrated financial services and achieve growth with customers.

As of 18Q4, the customer coverage of financial institutions exceeded 90%, and corporate and retail customers increased by 13 respectively.

38%, 23.

51%, of which private banking customers exceeded 30,000, an increase of 32.

64%.

Retail bank customers (including credit cards) 6857.230,000 households, an increase of 1305 over the beginning of the period.

260,000 households.

Inclusive small and micro enterprise loans, and private enterprise loans each increase by 61 each year.

40%, 23.

39%.

The company became the first Chinese bank to issue green financial bonds in two domestic and foreign markets. The world’s largest commercial financial institution that issues green financial debt balances has a green financing balance of more than $ 800 billion.

  Investment suggestion: The proportion of the company’s interbank and financial market business far exceeds that of other banks, and the company is more sensitive to the marketization of interest rates.

  The scale of non-standard investment business of companies with strong regulatory environment continued to decline, and the cost rate of interbank business rose rapidly.
After the second half of the year, the high point of market capital interest rates dropped, and it is expected that the company’s peers will refuse pressure to promote easing.

The company’s traditional deposit and loan business has continued to increase in proportion, while the overlapping negative pressure has eased. We believe that the increase in interest margins can be expected.

We predict a BVPS of 23 in 2019-2021.

58, 27.

06 and 30.

91 yuan / share, the net profit growth rate is 7.

5%, 10.

3% and 10.

2%.

The fundamentals of the company have improved significantly, with ROE at the top of the stock bank.

As of June 24, 2019 industry PB is 0.

89 times, the stock bank PB is 0.

83 times.

According to the PB-ROE model, we believe that the company should be given an average valuation, corresponding to 2019 EPB of 0.

80 to 1.

0 times, corresponding to a reasonable value interval of 18.

86 yuan to 23.

Between 58 yuan, give the company a “previous market” rating.

  Risk warning: the company’s ability to repay its debts declines, and the quality of its assets deteriorates severely; major changes in financial regulatory policies