China CITIC Bank (601998): Q4 NPL ratio has improved markedly, and provisioning strength has not decreased

China CITIC Bank (601998): Q4 NPL ratio has improved markedly, and provisioning strength has not decreased

Investment Highlights: CITIC Bank’s revenue growth accelerated in the fourth quarter, but at the same time the NPL index improved significantly.

In the future, we are optimistic about the continuous growth of program fee income and give a “continuous market” rating.

19Q4 revenue and profit growth rate.

According to the 2019 annual performance report (the same as the 2019 annual data), the revenue growth rate in ten years was 13.

8%, down 3 from the first three quarters.

5 units, of which the single quarter growth rate of 4 in the fourth quarter.

0%; net profit attributable to mothers increased by 7.

9%, down 2 from the first three quarters.

9 averages, of which the single quarter in the fourth quarter fell 5 year-on-year.

8%.

The company’s highest return on net assets is 11.

07%, a decrease of 0 from 2018.

32 units.

The effective tax rate decreased in 19Q4.

We calculated the company’s effective tax rate for ten years.

4%, down 2 from the first three quarters.

Three averages, the effective tax rate in the first three quarters has been above 15%.

We expect the company to increase its tax-free asset allocation in the fourth quarter.

19Q4 asset growth accelerated slightly.

At the end of 2019, total assets grew at a rate of ten years.

2%, an increase of 1 from the end of the third quarter.

Zero digits; the chain growth rate at the end of 2019 was 4.

4%.

We estimate that the company has sufficient project reserves in the fourth quarter, which has accelerated asset issuance.

The 19Q4 bad rate decreased significantly.

NPL ratio at the end of 2019 1.

65%, consistent with mid-2017 levels.

The company’s NPL ratio decreased by 1 in the first three quarters.

72%, the non-performing rate improved significantly in the fourth quarter, down 7BP.

Considering that the company’s interest rate for the category of loans at the end of the first half of the year showed a downward trend and an earlier decrease of 3BP, we expect the NPL ratio to improve to a new level with no marginal pressure, which will lead to the company’s increased write-off of the bad inventory.

We expect 19Q4 provisions to remain unchanged.

The provision coverage ratio at the end of 2019 was 175.

25%, up 0 from the previous month.

43 averages, an increase of 17 earlier.

27 units.

We believe that the company will continue to maintain coaxial provisioning in the fourth quarter.

Bad confirmation is in place.

Looking back at the asset quality indicators of CITIC Bank, the recent high point of non-performing ratio was 1.
80%, mainly due to the company in 2Q18 over 90 days overdue replacement.

Since then, the non-performing rate has gradually declined for three consecutive quarters.

Adverse consequences at the end of the first quarter of 19

72%.

In terms of breakdown, the personal loan NPL ratio is stable, and the corporate loan NPL ratio continues to rise.

The company proactively adjusted the loan structure, reduced the manufacturing and wholesale and retail loans, and expanded 南京夜网 personal loans with better asset quality.

Investment Advice.

CITIC Bank’s revenue growth rate in the fourth quarter, but at the same time the NPL index has improved significantly.

We obtain a reasonable value of 7 based on the DDM model.

42 yuan, and the comparable estimation method, according to the PB-ROE model, the company’s 2019E PB estimate is 0.

9 times (comparable company is 1.

14 times), corresponding to a reasonable value of 8.

14 yuan.

Therefore, the 2019 PB assessment is given as 0.

82-0.

90 times, corresponding to a reasonable value interval of 7.

42-8.

14 yuan (corresponding to 7 for 2019 PE).

8-8.

5 times, the corresponding company’s PE is 8.

29 times), give “previous market” rating.

Risk warning: the company’s ability to repay its debts has declined, and the quality of 深圳丝袜会所 its assets has deteriorated severely; major changes have occurred in financial regulatory policies.