20220511-农银国际证券-工商银行-601398.SH-High_fundamental_stability_as_core_strength_5页_276kb

报告摘要

ICBC (1398 HK / 601398 CH) Summary

Core Content

ICBC, one of the largest banks in China, is highlighted for its strong fundamental stability and resilience against macroeconomic and policy changes. The report outlines key financial trends, valuation metrics, and investment outlook for the bank, emphasizing its long-term growth potential and strategic initiatives.

Main Points

Provision Expenses Reduction: The government encourages big banks to lower risk buffers to support the real economy. ICBC is expected to reduce its provision expenses at a -2% CAGR over FY21-24E, which will lower its provisioning ratio and provision coverage ratio to 2.78% and 187.84% by end-24E, respectively.
NIM Pressure: The resurgence of the interest rate cut cycle in China will put downward pressure on ICBC's net interest margin (NIM). The NIM is projected to narrow by 2bps-5bps YoY in FY22E-24E, reaching 2.02% by FY24E. However, the bank's robust total assets and liabilities growth (6.0% and 5.8% CAGR) are expected to help offset this pressure.
FinTech Investment: To enhance its competitive edge in big data, ICBC is expected to continue investing in FinTech. Technology-related expenses are forecasted to remain at ~3% of revenue, leading to a mild rise in the cost-income ratio (CIR) to 29.29% by 2024E.
Valuation: The report reiterates a "BUY" rating for ICBC, with updated target prices (TPs) of HK$7.45 for H-shares and RMB7.70 for A-shares. These TPs imply a target P/B of 0.73x and 0.87x for FY22E, respectively.
Earnings and Profitability: ICBC is expected to maintain a consistent earnings growth, with net profit CAGR of 6.8% over FY21-24E. EPS is projected to increase from RMB0.86 in 2020A to RMB1.16 in 2024E. ROAE is expected to remain stable, with a projected 11.79% in FY24E.
Balance Sheet Growth: Total assets and liabilities are forecasted to grow at 6.0% and 5.8% CAGR, respectively, from FY21 to FY24E, reflecting the bank's strong capital base and expansion strategy.

Key Financial Metrics (FY Ended Dec 31)

Metric	2020A	2021A	2022E	2023E	2024E
Revenue (RMB mn)	800,075	860,880	908,093	963,560	1,033,704
Net Profit (RMB mn)	315,906	348,338	365,702	386,818	424,358
EPS (RMB)	0.86	0.95	1.00	1.06	1.16
BVPS (RMB)	7.48	8.15	8.83	9.54	10.33
P/E (x) - H-shr	4.54	4.12	3.92	3.70	3.36
P/B (x) - H-shr	0.52	0.48	0.44	0.41	0.38
P/E (x) - A-shr	5.49	4.98	4.73	4.47	4.06
P/B (x) - A-shr	0.63	0.58	0.54	0.50	0.46
ROAA (%)	1.00	1.02	1.01	1.01	1.04
ROAE (%)	11.95	12.15	11.72	11.56	11.79

Key Growth Projections

Item	FY21-24E CAGR
Revenue	6.3%
Net Profit	6.8%
Operating Income	5.5%
Net Interest Income	6.3%
Net Fee and Commission	6.0%
Total Assets	6.0%
Total Liabilities	5.8%
Operating Expenses	11.2%
Pre-Provision Operating Profit	5.3%
Net Profit Attributable to Ordinary Shareholders	10.0%

Risk Factors

Radical changes in the business environment due to heavy-handed supervision and policies.
Potential asset quality deterioration in specific sectors and geographical areas.
Rising CIR from FinTech development.
Elevating NIM pressure due to the interest rate cut cycle.
Resurgence or prolonged impact of the COVID-19 pandemic.

Investment Rationale

ICBC's strong fundamental stability makes it a long-term core holding.
The bank is expected to maintain consistent earnings and profitability despite macroeconomic challenges.
Its strategic focus on FinTech and cost management will help enhance its competitive position.
The "BUY" rating is supported by the projected P/B ratios and growth prospects.

Analyst Information

Analyst: Johannes Au
Rating (H): BUY
Rating (A): BUY
TP (H): HK$7.45
TP (A): RMB7.70
Previous Rating & TP (H): BUY, HK$7.52
Previous Rating & TP (A): BUY, RMB7.63
Est. Total Return (H): 72.23%
Est. Total Return (A): 69.51%
Est. Dividend Yield (H): 8.13%
Est. Dividend Yield (A): 6.72%

Key Ratios and Changes

CT1 CAR: Projected to rise from 13.01% to 14.97% by FY24E.
Total CAR: Expected to increase from 16.63% to 19.59% by FY24E.
NPL Ratio: Projected to rise from 1.45% to 1.48% by FY24E.
Provision to Total Loans: Forecasted to decrease from 2.88% to 2.78% by FY24E.
Provision Coverage Ratio: Expected to decrease from 198.62% to 187.84% by FY24E.
CIR: Projected to increase from 24.01% to 29.29% by FY24E.

Conclusion

ICBC is positioned as a stable and resilient investment due to its strong fundamentals, strategic focus on FinTech, and ability to adapt to macroeconomic pressures. The report maintains a "BUY" rating, highlighting the bank's potential for long-term growth and its competitive edge in the evolving financial landscape.

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