Bank stocks AH is rarely divergent, affected by the net interest margin falling to 1.54%? Industry: follow-up or inflection point

Finance Associated Press

2024-06-03 18:12Published on the official account of Cailianpress, a subsidiary of Shanghai Poster Industry Group

Finance Associated Press, June 3 (Reporter Liang Kezhi) Today's A-share banking sector fell, mainly small and medium-sized bank stocks, of which Shanghai Rural Commercial Bank fell nearly 7%, Bank of Jiangsu, Bank of Suzhou, Bank of Ningbo, CITIC Bank, etc.

At the same time, most of the bank stocks in Hong Kong stocks rose, with the six major banks closing up 0.81%-1.6%; H-shares such as China CITIC Bank and China Merchants Bank, which fell in A-shares, all closed higher. There is a rare divergence between the stock markets and the banking sector of the two places.

On June 3, a foreign-funded brokerage in Hong Kong told the Financial Associated Press that domestic bank stocks were adjusting after reaching a stage high in late May, and today's slight rise should be technical, and there is no special policy and market news at present.

In the mainland, on May 31, the State Administration of Financial Regulatory Commission released regulatory data showing that the net interest margin of commercial banks fell further to 1.54% in the first quarter of this year, after falling below 1.7% for the first time at the end of the fourth quarter of last year, reaching 1.69%.

CICC reported on June 3 that although net interest margins continued to decline at the end of the first quarter, banks' net profits remained resilient. In April, manual interest rate supplements were prohibited, and since the top-down guidance of banks' debt costs downward, it is expected that the subsequent decline in bank interest margins may narrow.

There is still room for net profit, and the net interest margin in the second quarter may usher in an inflection point

The above-mentioned Hong Kong brokerage believes that Hong Kong investors are more concerned about the asset risk of domestic bank stocks than interest rate spreads.

According to CICC's statistics, in terms of types, at the end of the first quarter, the non-performing ratio of urban commercial banks increased by 3bp quarter-on-quarter to 1.78%, while large state-owned banks, joint-stock banks and rural commercial banks decreased slightly or stabilized quarter-on-quarter. The provision coverage ratio of large state-owned banks rose by 2.7ppt month-on-month to 251.2%, while that of joint-stock banks and urban and rural commercial banks declined.

In addition, the capital adequacy ratios of large banks, joint-stock banks and rural commercial banks increased to varying degrees, but urban commercial banks fell by 16bp month-on-month to 12.46%, according to CICC's analysis, or due to the sinking of bond allocation, or due to risk exposure and disposal.

For the next quarter, CICC believes that since the ban on manual interest rate replenishment in April and the top-down downward guidance of bank debt costs, it is expected that the subsequent decline in bank interest margins may narrow.

Wang Yifeng, an analyst at Everbright Bank, further believes that in the second quarter, with the digestion of factors such as the repricing at the beginning of the year and the reduction of the existing mortgage interest rate, and the further release of the "interest rate cut" dividend on deposits, the pressure of narrowing interest rate spreads has been released, and the net interest margin of the banking system may usher in an inflection point in the future.

In the first quarter, large banks and small and medium-sized banks were divided

According to the regulatory data of the State Financial Regulatory Administration, the net interest margin of commercial banks in the first quarter was 1.54%, down 15bp from the previous year. Among them, the net interest margins of state-owned banks, joint-stock banks, urban commercial banks and rural commercial banks were 1.47%, 1.62%, 1.45% and 1.72% respectively, down 15, 14, 12 and 18bp respectively from the previous year.

Wang Yifeng of Everbright Bank released a report on June 3 that the downward pressure on interest rate spreads at the end of the first quarter came from the lack of residents' desire for debt, the continuous decline in the directional level of interest rates, and the maturity of high-priced loans in the early stage and the one-time reduction of existing mortgage interest rates, which caused greater pressure on the return on bank assets.

Previously, a credit person from the Guangzhou branch of a joint-stock bank told the Financial Associated Press that the cost of retail business is high, especially the difficulty of obtaining fewer customers for new customers, and the profit margin has also been significantly reduced.

In addition, regulatory data from the State Administration of Financial Regulatory Affairs showed that at the end of the first quarter of 2024, the total domestic and foreign currency assets of mainland banking financial institutions were 429.6 trillion yuan, a year-on-year increase of 8.1%. Among them, the total domestic and foreign currency assets of large commercial banks were 185 trillion yuan, a year-on-year increase of 11.2%, accounting for 43.1%; The total domestic and foreign currency assets of joint-stock commercial banks were 71.8 trillion yuan, a year-on-year increase of 4.1 percent, accounting for 16.7 percent.

In this regard, CICC believes that the total assets of commercial banks at the end of the first quarter slowed down compared with the fourth quarter of last year, which is in line with the expectation that the central bank will guide the return of credit to a reasonable growth rate.

It is worth noting that large state-owned banks increased by 11.2% year-on-year, accounting for 43.1% of the banking industry, indicating that the concentration has further increased. In contrast, the total assets of joint-stock banks, urban commercial banks and rural commercial banks increased by only 4.1%, 9.7% and 7.2% year-on-year.

(Finance Associated Press reporter Liang Kezhi)

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