News 2024-06-17 121 Comments

5 A-Share Banks' Q3 Reports: Signals Unveiled

Five A-share listed banks have released their Q3 reports ahead of schedule. As of October 27th, Ping An Bank, Hangzhou Bank, Nanjing Bank, Changshu Bank, and Shanghai Rural Commercial Bank have disclosed their operating conditions for the first three quarters of 2024. The net profit attributable to the parent company of these five banks has generally achieved positive year-on-year growth, but there is a clear trend of divergence, with Ping An Bank's revenue still showing negative growth. Additionally, looking at the comparable data from two banks, the net interest margin is still in a downward trend.

In terms of asset expansion pace, the growth rates of various banks in the first three quarters have increased and decreased compared to the first half of the year. Regarding non-performing loan ratios, Ping An Bank has improved compared to the mid-year, while Changshu Bank continues to rise, and the other three banks remain unchanged. In terms of loan loss coverage ratios, all five banks have experienced不同程度的下滑.

The interest margin continues to narrow, and the profit growth rate is still diverging. In the first three quarters of this year, Ping An Bank's revenue growth continued the negative growth trend from the first half of the year, with a slight narrowing of the decline compared to the mid-year report, but it is still above 12%. Among the other four banks that have disclosed their financial reports, Changshu Bank's revenue growth exceeded 10% year-on-year, continuing to lead, but slightly declined compared to the first half of the year; Nanjing Bank's revenue growth exceeded 8% year-on-year, slightly higher than the first half of the year; Hangzhou Bank and Shanghai Rural Commercial Bank's revenues grew by 3.87% and 0.34% year-on-year, respectively.

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The net profit attributable to the parent company of the five banks achieved positive year-on-year growth in the first three quarters, but the growth rate also showed a significant divergence. Among them, Hangzhou Bank and Changshu Bank led with year-on-year growth rates of 18.63% and 18.17%, respectively, but both declined compared to the first half of the year; Nanjing Bank and Shanghai Rural Commercial Bank's net profit attributable to the parent company grew by 9.02% and 0.81% year-on-year, respectively, slightly higher than the mid-year; Ping An Bank's net profit attributable to the parent company increased by 0.24% year-on-year, a significant decline from the 1.94% in the first half of the year, with a 2.8% decrease in the third quarter.

Regarding the decline in revenue and the slight positive growth in net profit attributable to the parent company, Ping An Bank stated that the former was mainly affected by the continuous concession to the real economy, adjustment of asset structure, and other factors. By driving cost reduction and efficiency improvement through digital transformation, strengthening asset quality control, and increasing the collection and disposal of non-performing assets, the bank's net profit increased year-on-year.

Looking at the main components of revenue, the downward pressure on net interest income is still present. Among them, Ping An Bank's net interest income decreased by more than 20% year-on-year, but it has narrowed by about 1 percentage point compared to the year-on-year decline in the first half of the year; Shanghai Rural Commercial Bank and Nanjing Bank's net interest income also declined by about 3% and 1%, respectively; Hangzhou Bank and Changshu Bank's net interest income increased by 3.87% and 6.15% year-on-year, respectively.

In terms of interest margins, only Ping An Bank and Changshu Bank have disclosed their net interest margin data for the first three quarters separately, both of which have declined by 3 basis points (BP) and 4 BP, respectively, to 1.93% and 2.75%. Compared to the same period last year, Ping An Bank and Changshu Bank's net interest margins have decreased by 54 BP and 20 BP, respectively.

In this regard, Ping An Bank stated in its financial report that during the reporting period, the bank insisted on concession to the real economy, actively adjusted the asset structure, and was affected by factors such as the downward trend of market interest rates, insufficient effective credit demand, and loan repricing, leading to a decline in the net interest margin.

Shanghai Rural Commercial Bank also mentioned in its future outlook that affected by multiple factors such as multiple adjustments of the LPR (Loan Prime Rate) and deposit挂牌利率 within the year, and the repricing of existing deposits and loans, the interest rates on both the asset and liability sides of the banking industry continue to decline. In the trend of the interest margin continuing to narrow, the bank will follow policy guidance, actively respond to market changes, strengthen forward-looking analysis and refined management, optimize the asset-liability structure, and strive to achieve an interest margin performance better than the industry average.In addition to net interest income, the intermediate income of some banks is still under pressure. The financial report of Shanghai Rural Commercial Bank shows that the net income from fees and commissions of the bank decreased by 16.45% year-on-year in the first three quarters, mainly affected by the decline in the insurance agency fee rate, resulting in a reduction in related fee income.

However, during the same period, some banks also achieved a counter-trend increase in net income from fees and commissions. For example, Changshu Bank achieved related income of 65.088 million yuan in the first nine months of this year, a significant increase of 2.6 times compared to 18.079 million yuan in the same period last year. The semi-annual report shows that the net income from fees and commissions of the bank in the first six months was 19.233 million yuan, which also significantly improved compared to the same period last year (negative growth), and the third quarter continued to show a significant increase compared to the first half of the year.

The scale of assets continues to expand steadily, and the imbalance between loans and deposits of several banks is still obvious.

Looking at the pace of expansion, the scale of assets of various banks continued to grow in the first three quarters of this year, with varying speeds compared to the first half of the year. The asset growth rates of Nanjing Bank, Hangzhou Bank, and Shanghai Rural Commercial Bank increased compared to the middle of the year, while the asset growth rates of Ping An Bank and Changshu Bank slightly decreased compared to the middle of the year.

In terms of liabilities, the growth rate ranking of each bank is consistent with the asset growth rate, with the overall growth rate of urban and rural commercial banks higher than that of joint-stock banks. Among them, the growth rate of Nanjing Bank is the highest, exceeding 11%, followed by Hangzhou Bank and Changshu Bank, both above 8%. The liabilities of Shanghai Rural Commercial Bank and Ping An Bank increased by 6.05% and 2.75% respectively compared to the beginning of the year.

However, looking at the situation of loans and deposits, the imbalance of some banks is still quite obvious. In the first three quarters, the deposit growth rate of Changshu Bank slightly increased compared to the first half of the year, reaching 14.79%, and the loan growth rate increased from 7.42% in the middle of the year to 7.75%; Ping An Bank's loan growth rate decreased to -0.7% under the condition that deposits increased by 3.7% compared to the beginning of the year, while the two were 4.8% and 0.2% respectively in the middle of the year.

The decline in Ping An Bank's loan growth rate is mainly due to the drag of retail business, especially credit cards, consumer loans, and business loans. In the first three quarters, the balance of personal loans of the bank decreased by 9.6%. In response, Ping An Bank explained that the bank actively adjusted the structure of retail loan business in line with changes in the external business environment, promoting the balanced development of "quantity, price, and risk". From the data, the balance of housing mortgage loans of the bank at the end of the period was 312.537 billion yuan, a 3.0% increase compared to the end of last year; the balance of credit card receivables was 453.088 billion yuan, a 11.9% decrease compared to the end of last year; the balance of consumer loans was 476.892 billion yuan, a 12.5% decrease compared to the end of last year; the balance of business loans was 544.83 billion yuan, a 11.4% decrease compared to the end of last year.

In contrast, the difference between the loan growth rate and the deposit growth rate of Nanjing Bank has further expanded. In the first three quarters, the loan growth rate of the bank increased by 12.52%, significantly accelerating compared to 9.79% in the first half of the year, but the deposit growth rate was only 2.42%, a decline compared to 3.58% in the first half of the year.

In addition, looking at the liability structure, under the influence of multiple factors, the significant reduction in corporate deposits of some banks in the first half of the year has attracted attention. From the situation in the first three quarters, this trend has not significantly improved. Among the above five banks, there are three enterprises with a reduction in demand deposits, namely Hangzhou Bank, Nanjing Bank, and Shanghai Rural Commercial Bank (the standard is "corporate deposits"). Among them, the deposit loss of Nanjing Bank's corporate demand deposits decreased by nearly 50 billion yuan compared to the beginning of the year, with a decline rate of more than 18%.

In terms of personal loans, since last year, many banks' mortgage business has been continuously shrinking under the pressure of both stock and incremental aspects. However, Shanghai Rural Commercial Bank mentioned in its financial report that under the condition of the continuous high scale of early repayment, the bank has increased credit investment, and the scale of personal loans has shown a good growth trend since the second quarter of this year. The cumulative amount of housing mortgage loans in the first three quarters increased by more than 40% compared to the same period last year.Asset Quality Improvement, Full Decline in Provision Coverage Ratio

In terms of asset quality, compared to the first half of this year, at the end of the third quarter, the non-performing loan (NPL) ratio of five banks showed a "one increase, three stable, one decrease" trend. Among them, Changshu Bank's NPL ratio slightly increased by 0.01 percentage points to 0.77%, while Ping An Bank's NPL ratio slightly decreased by 0.01 percentage points to 1.06%.

Nanjing Bank stated that since 2024, the company has, on one hand, strengthened the implementation of credit policies and customer group selection, strictly controlling the entry point. On the other hand, it has accelerated the clearance of existing risks and increased the intensity of NPL disposal, continuously consolidating the foundation of asset quality, with main indicators remaining stable. In the fourth quarter, the bank will continuously improve the forward-looking nature of risk prevention and control, deepen credit risk investigation and early warning management, strengthen the stratified and classified disposal of risky customers, and ensure that asset quality remains excellent.

Regarding the provision coverage situation, the provision coverage ratio of the five banks declined to varying degrees in the third quarter. Specifically, Ping An Bank and Changshu Bank saw their provision coverage ratios drop by 13.07 and 10.41 percentage points respectively at the end of the third quarter compared to the mid-year. Compared to the end of last year, Shanghai Rural Commercial Bank's provision coverage ratio has decreased by 40 percentage points, while Ping An Bank and Nanjing Bank have seen declines of about 26 and 20 percentage points respectively. The provision coverage ratio of Hangzhou Bank has also approached a decline of 20 percentage points. Among them, Hangzhou Bank and Changshu Bank's provision coverage ratios remain at a high level above 500%, while Ping An Bank has dropped to 251.19%.

In terms of capital adequacy ratio, most banks have seen further improvement in related indicators compared to the mid-year. However, Shanghai Rural Commercial Bank's capital adequacy ratio, tier-1 capital adequacy ratio, and core tier-1 capital adequacy ratio have improved compared to the beginning of the year, but have declined to varying degrees compared to the mid-year. Ping An Bank's tier-1 capital adequacy ratio has also slightly declined compared to the mid-year.

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