Ping An Bank (000001): Converting debt to equity does not change the ROE pick-up trend, asset quality is consolidated once again

Ping An Bank (000001): Converting debt to equity does not change the ROE pick-up trend, asset quality is consolidated once again

Event: Ping An Bank disclosed its third quarter report for 2019 and achieved operating income of 1,029 in the first three quarters of 2019.

580,000 yuan, an increase of 18 in ten years.

8%; net profit attributable to mother is 236.

21 ppm, an increase of 15 in ten years.

5%; 19Q3 NPL ratio remained flat at 1 quarter-on-quarter.

68%, basically in line with expectations.

  Revenue has further accelerated, and after considering the effects of conversion of debt to equity, the ROE has gradually become a trend.

The conventional profit indicators continue to be strong, with 9M19 revenue, PPOP and net profit or growth attributable to mothers, respectively, at 18.

8%, 19.

0% and 15.

5%, a further increase from the previous growth rate of the Interim Report.

The strong profitability helps it to consider the impact of the conversion of debt to equity and dilute the ROE, which can still be exchanged for pick-up. The 9E19 Ping An Bank ROE is 12.

64%, increase 4bps a year, continue the upward trend since the quarterly report.

Therefore, we believe that the ROE trend rebound will strongly support its scale to break through the nesting of 1X PB and continue to rise under the plan of clearing the quality of the existing assets.Estimated from 1X 17 PB repairs to 1.

6X 17PB, we maintain Ping An Bank’s target valuation of 1.

5X 19 PB.

  The quality of assets was further consolidated, and the degree of bad deviation decreased significantly.

In the third quarter of 19, Ping An Bank’s NPL ratio was flat at 1 quarter-on-quarter.

68%, the single quarter annualization and write-off write-off generation rate increased by 36bps to 202bps quarter-on-quarter, but looking at the first three quarters, the 9M19 plus write-off write-off generation rate fell by 44bps to 159bps.

In our judgment, the transition to non-performing generation in the third quarter was mainly due to Ping An Bank’s further initiative to strictly identify non-performing loans. 3Q19 loans overdue for more than 90 days / non-performing quarters fell by 7 quarters to 87%.

According to estimates, after adding all the loans that are overdue for more than 90 days and all the non-performing loans, Ping An Bank confirmed that 2.5 billion loans that were overdue within 90 days were non-performing in 3Q19 over 2Q19.Big.

While improving the non-performing identification standards, Ping An Bank’s interest-based loans and interest-based loan ratios have doubled down for the fifth consecutive quarter, and 3Q19 interest-based loan rates have fallen by 9bps to 2 quarterly.

39%, the overdue loan rate remained flat at quarter to quarter.

34%.

In terms of different products, the non-performing loan ratio of the three leading retail products remained relatively stable. The non-performing loan ratios of credit cards, new loans, and auto loans were -2bps, + 11bps, and -1bp to 1 respectively.

35%, 0.

73% and 1.

12%.

Provision level has also been further consolidated. 3Q19 Ping An Bank’s provision coverage ratio increased 4 quarters to 186%.

  The downward adjustment of asset-side pricing dragged down interest margins, but Ping An Bank proactively increased the resistance to mortgage rates and reduced risk is conducive to improving the quality of assets and the robustness of the income statement. In the current environment, we believe this is a very correct credit strategy.

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In 3Q19, Ping An Bank’s net interest margin fell 9bps to 2 quarter-on-quarter.

62%, mainly affected by the loan-side interest rate factor (-11bps), retail and public loan yields fell by 27bps and 21bps to 4 quarter-on-quarter, respectively.

67% and 7.

72%.

  In addition to being affected by the replenishment of financial market interest rates to the credit market, Ping An Bank proactively adjusted the structure of retail loans. In 3Q19, 67% of the increase in retail loans was allocated to guaranteed or pledged loans, which accounted for a quarter-on-quarter increase in retail loans.

2 up to 11.

1%.On the debt side, the repricing of Ping An Bank’s interbank debt continued to release favorable conditions, but the decline was lower than in previous quarters.

In the third quarter of 19, Ping An Bank’s interbank debt and interbank deposit rates fell by 5 basis points and 26 basis points quarter-on-quarter to 2 quarter-on-quarter, respectively.

61% and 3.

15%.

In terms of deposits, the growth rate of Ping An Bank’s deposits improved in the third quarter of 1919, but the quarterly cost increased by only 2bps to 2 quarter-on-quarter.

48%, still relatively stable.

  To expand the retail customer base in all directions, AUM has steadily improved, and the 杭州桑拿网 strength of private wealth management has improved significantly.

After Ping An Bank’s retail transformation entered the second stage, basic retail and private wealth have become the three major sectors parallel to consumer finance.

In the number of private customers, the growth rate of AUM was faster than the overall, and the strength of high-end wealth management was significantly improved.

In terms of number of customers, as of the third quarter of 19, the total number of retail customers of Ping An Bank increased by 12% compared with the beginning of the year, and it increased by 4% quarter-on-quarter to 93.66 million.

09 million households.

From the perspective of AUM, as of the third quarter of 19, Ping An Bank’s overall AUM increased by 32% from the beginning of the year, and increased by 7% quarter-on-quarter to 18722 trillion.Compared with the beginning of the year, it increased 4 values to 36%.

  Company view: Re-Ping An Bank’s first portfolio, target price 1.

5X 19 PB.

Ping An Bank’s bad inventory was cleared in 2019, the income statement was obviously repaired, the ROE started a rebound trend, and the strong earnings performance has offset the impact of convertible debt-to-equity diluted ROE.

After Ping An Bank converted its debt into place and launched the new corporate model, its overall debt costs will continue to increase in the future, and the asset side will reduce certain risk substitutions, forming a virtuous circle of high interest margins and low risks for retail banks.

Maintain “Buy” rating and regroup first.

It is expected that the growth rate of net profit attributable to mothers will be 16 in 2019-2021.

0% / 17.

8% / 19.

0% (Upgrade the profit forecast for 20 and 21 years, the original 19-21 year return to net profit growth rate of the mother is 16.

0% / 17.

0% / 17.

8%, increasing the growth rate of non-interest income), currently corresponding to 19 years.

16X PB, maintain target price of 1.

5X 19 PB, 29% upside.

  Risk Warning: The severe economic downturn has caused bad risks for the industry.