Guiyang Bank (601997) Annual Report Commentary Report: ROE Maintains Leading Asset Quality Adjustment Mitigation

Guiyang Bank (601997) Annual Report Commentary Report: ROE Maintains Leading Asset Quality Adjustment Mitigation
Event: On April 15, Guiyang Bank disclosed its 18-year annual report.18 years to achieve revenue of 126.50,000 yuan, +1 year on year.4%; profit before provision 91.5 billion, a year-on-year increase of +3.0%; net profit attributable to mother 51.4 billion, a year-on-year increase of +13.4%; ROE reached 18.88%, a decline of 0 every year.88%; Defective rate 1.35%, 1BP per line. Opinion: Although the performance growth rate has improved from the previous 17 years, it still maintains a high ROE level. The 18-year revenue growth rate is not high.Mainly the only growth rate of net interest income in 18 years.9% (17 in 29.3%).Under the influence of the new 18-year asset management regulations, net fee income only replaced 13.8%, the performance is relatively better.Mainly because the wealth management income increased by 0.500 million to 5.1.4 billion, bank card revenue increased significantly1.1.3 billion, the retail business has potential.Under the 上海夜网论坛 dual effects of less provision and the tax exemption effect of investment funds, it was only 3 in 18 years.2% pre-provision profit growth, yielded 14.0% net profit growth.Although ROE cancelled 88BP compared with 17 years, it still reached 18.88%, which is higher than the other 9 city commercial banks that have disclosed ROE, and is 5 higher than the average of the 9.20 pct, the advantage has expanded by 0 compared to 17 years.65 pct.Net interest margin 2.33%, 34BP lower than 17 years, but 3BP higher than 3Q18.This is because interbank financing + bond financing accounted for 31 of interest-bearing debt.5%, since the second half of 18, the market fund interest rate has remained low, and the debt-side pressure relief effect has been significant. At the end of 18 years, Guiyang Bank invested 259.7 billion yuan, a year-on-year increase of +1.5%, almost the same as the beginning of the year; loan balance was 170.3 billion, a year-on-year increase of +35.7%.In the context of supervision and encouragement of bank loans, the proportion of loans increased7.3 pct, investment fell by 3.3 pct.Looking at the structure of the investment side, the proportion of non-standard investments (ie asset management / trust schemes) in Guiyang from 13-17 used to be 17.0% jumped to 47.9%, under the strong regulatory situation of 17-18H1, committed to strengthening platform financing risks.However, in the past 18 years, there have been two improvements: 1) Since the end of 18 years, under the guidance of stable economic policies, the margins for platform financing have been relaxed, and non-standard financing has stopped falling and stabilized.It has been verified beyond expectations, and the potential risks have been greatly mitigated. 2) At the end of 18, compared with the beginning of the year, the proportion of non-standard investments on the investment side has decreased by 6.4 pct to 41.5%, the proportion of government and financial bonds increased by 3.4 pct to 44.2%, the security of investment structure is improving. Potential non-performing indicators have continued to improve, and the capital after the issuance of preferred shares is more abundant. Guiyang Bank’s non-performing ratio at the end of the year1.35%, an increase of only 1BP over 17 years; provision coverage ratio is 266.05%, down 3 from the beginning of the year.68 pct, basically stable.Looking at the potential adverse indicators, they continued to improve significantly.Attention rate / overdue rate / overdue 90+ ratio, followed by 60BP / 107BP / 24BP.The degree of non-performing loan deviation has been 99 from 17 years.4% recognized 80 for 18 years.9%, bad identification is stricter.At 18Q3, the capital adequacy ratio was 11.52%, only 102BP from the regulatory red line, was a distortion of capital constraints at the time.After the issuance of 5 billion preferred shares, its 18Q4 has increased by 145BP month-on-month, a significant improvement.The core tier 1 capital adequacy ratio has decreased, but it is still higher than the regulatory red line of 211BP. Investment suggestion: the proportion of loans will increase / the proportion of non-standards will decrease, and the quality of assets will be reduced for 18 years. ROE is still as high as 18.88%; the asset-side structure has improved, platform financing supervision has been relaxed, and asset quality has improved.It is expected that the growth rate of net profit attributable to mothers will be 10 in 19-21.7% / 12.2% / 13.5%, the corresponding EPS is 1.77/1.98/2.25 yuan, the marginal improvement is significant, superimposed in 19 years, 10 get 4 free, so raise the target price to 18.17 yuan, corresponding to 1.4 times 19 PB, maintain overweight rating. Risk reminders: accelerated exposure of risks in non-standard investment and financing platforms; increased uncertainty in internal and external environments