20220427-招银国际-上海银行-601229.SH-FY21_review__results_in_line,_gratifying_optimization_on_deposit_strategy_4页_825kb

Bank of Shanghai (601229 CH) Company Update Summary

Core Content Overview

This report provides an in-depth analysis of Bank of Shanghai's (BoSH) FY21 performance, along with updated financial forecasts and investment ratings. The key focus areas include revenue growth, net profit performance, deposit strategy optimization, asset quality improvements, and capital adequacy. The report also includes market performance data and analyst recommendations.

Key Financial Highlights (FY21)

• Operating Income: Increased by 10.8% YoY to RMB 56.2bn.
• Net Interest Income (NII): Rose by 11.1% YoY to RMB 40.4bn.
• Fee & Commission Income: Surged by 61.3% YoY to RMB 9.0bn, driven by growth in fund distribution and WMP distribution.
• PPOP (Provision for Loan Losses): Grew by 7.0% YoY to RMB 45.3bn.
• Net Profit: Increased by 5.54% YoY to RMB 22bn.
• NPL Ratio: Increased by 3bps YoY to 1.25%, mainly due to property defaults.
• NIM (Net Interest Margin): Compressed by 8bps YoY to 1.78%, influenced by LPR cuts and regulatory support for the real economy.
• CIR (Cost Income Ratio): Increased by 25.9% YoY to 21.51%, primarily due to rising operating expenses.

Deposit Strategy Optimization

• Deposit Cost Decline: Reduced by 8bps YoY to 2.07%.
• Corporate Term Deposit Cost Cut: Reduced by 21bps.
• Current Deposit Ratio: Improved from 36.82% to 38.00%, contributing to lower deposit costs.

Asset Quality Improvements

• Retail Loan NPL Ratio: Declined by 35bps YoY to 0.77%.
• NPL Ratio Breakdown:
  • Consumer loan: -41bps
  • Mortgage: -5bps
  • Retail SME: -24bps
  • Credit card loan: -9bps

Capital Adequacy

• CET-1 CAR: Decreased by 38bps YoY to 8.96%.
• Tier-1 CAR: Decreased by 62bps YoY to 10.96%.
• Total CAR: Decreased by 80bps YoY to 13.18%.

Investment Rating and Target Price

• Rating: Maintain BUY.
• Target Price: Trimmed from RMB9.04 to RMB8.68.
• Current Price: RMB6.46.
• Upside Potential: +34% from current price to target price.
• Valuation Basis: Rolled over to YE22, implying 0.60x and 0.55x P/B for 2022E and 2023E, respectively.
• Current P/B: 0.45x/0.41x for FY22E/FY23E, which is below the 3-year historical mean.

Earnings Summary (YE 31 Dec)

Stock Catalysts

• Safe Haven Demand: Key driver for investor interest.
• Declining Deposit Costs: Expected to lead to more resilient NIM in FY22.

Analyst Recommendations

• Maintain OVERWEIGHT on the banking sector.
• Maintain BUY on BoSH, with a revised target price of RMB8.68.

Shareholding Structure

• Shanghai lianhe Investment: 14.68%
• SIPG: 8.3%
• Banco Santander: 6.54%

Stock Performance

Financial Summary

Income Statement

• Net Interest Income: RMB 36,393 (FY20A) to RMB 40,437 (FY21A).
• Net Fee & Commission Income: RMB 5,608 (FY20A) to RMB 9,044 (FY21A).
• Operating Income: RMB 50,746 (FY20A) to RMB 56,229 (FY21A).
• Operating Expense: RMB -28,425 (FY20A) to RMB -32,671 (FY21A).
• PPOP: RMB 40,596 (FY20A) to RMB 43,524 (FY21A).
• Provision Taken: RMB -18,275 (FY20A) to RMB -19,966 (FY21A).
• Operating Profit: RMB 22,321 (FY20A) to RMB 23,558 (FY21A).
• Net Profit: RMB 20,885 (FY20A) to RMB 22,042 (FY21A).

Efficiency and Capital Adequacy

• CIR: Increased by 25.9% YoY to 21.51%.
• NPL Ratio: 1.22% (FY20A) to 1.25% (FY21A).
• Provision Coverage: 321% (FY20A) to 301% (FY21A).
• Allowance to Total Loan: 3.91% (FY20A) to 3.75% (FY21A).
• CET-1 CAR: 9.34% (FY20A) to 8.96% (FY21A).
• Tier-1 CAR: 11.59% (FY20A) to 10.96% (FY21A).
• Total CAR: 13.98% (FY20A) to 13.18% (FY21A).

Profitability Metrics

• NIM: 1.82% (FY20A) to 1.74% (FY21A).
• ROE: 12.09% (FY20A) to 11.82% (FY21A).
• ROA: 0.89% (FY20A) to 0.86% (FY21A).
• RORWA: 1.24% (FY20A) to 1.17% (FY21A).

Per Share Metrics

• EPS: 1.40 (FY20A) to 1.48 (FY21A).
• DPS: 0.40 (FY20A) to 0.40 (FY21A).
• BVPS: 12.00 (FY20A) to 13.01 (FY21A).

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months.
• HOLD: Potential return of +15% to -10% over next 12 months.
• SELL: Potential loss of over 10% over next 12 months.
• NOT RATED: Not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Disclaimer and Risk Information

• The report contains forward-looking statements and is subject to market risks.
• CMBIGM does not provide individually tailored investment advice.
• Investors are encouraged to consult with a professional financial advisor.
• The report is for informational purposes only and should not be construed as an offer or solicitation to buy or sell any security.
• CMBIGM may have conflicts of interest and is not liable for any loss or damage incurred from reliance on the report.