Bank of Wuxi (600908) prudently manages risk control and prudently adjusts business structure to improve risk pricing
The scale of assets ranks third among listed rural commercial banks, with obvious geographical advantages. Wuxi Bank was established in 2005 and was restructured from rural credit cooperatives. It was listed in September 2016 and is the first listed rural commercial bank.
In the third quarter of 2018, the company’s asset scale was 145.8 billion yuan, ranking third among listed rural commercial banks.
The company’s shareholding structure is decentralized, and the shareholding of senior executives is highly encouraged.
The company is located in Wuxi, which is the center of the Yangtze River Delta. Its GDP growth rate and per capita GDP level exceed the national and Jiangsu levels.
The tertiary industry accounts for more than half of Wuxi’s industrial structure, mainly in wholesale and retail.
The company has achieved full coverage of its business outlets in Wuxi, with a large number of branches. The company’s profits are concentrated in Wuxi. The intensified transfer competition has also begun to focus on the pace of expansion in other places.
The company’s investment highlights: better profitability, relatively prominent corporate business, cost control instead of peers 1) The company focuses on serving small, medium and micro enterprises, which account for nearly 96% of corporate loans.
The structure of public loans continued to be optimized, the manufacturing industry was pressured down, and the tertiary industry was supported.
2) The proportion of the company’s retail loans is lower than that of its peers and housing mortgage loans. The transformation of the retail business has been steadily progressing, the retail proportion has been steadily advancing, and the citizen card has been used to increase the business stickiness of local residents.
3) The company adjusted its asset structure, reduced the size of loans and the same industry, and stepped up investment in securities. 3Q18 securities investment accounted for 32%, a higher level for the industry.
4) The company’s profitability is good, operating income is growing faster, and the stability of profit growth is relatively high. Negative growth for 15 years can also turn negative into positive.
The decrease in ROE is narrower than that of its peers, showing its stability in profitability. ROA has grown from its lowest level in the industry to second only to Changshu Bank.
The 1H18 company’s net interest income accounted for 94%, the highest among listed rural commercial banks, and its cost-to-income ratio dropped significantly to 27%, significantly lower than its peers, showing a strong cost control capability.
5) Liabilities-side deposits accounted for 85%, the highest level among comparable listed rural commercial banks.
The scale and growth rate of deposits performed the best among listed rural commercial banks.
6) Although the level of interest margin has improved marginally, it is always lower than that of its peers due to further reductions in the rate of return on assets and the cost of debt.
The overall asset quality is better than comparable peers, and companies with higher levels of capital adequacy have a non-performing loan ratio of 3Q18 that is 10bps lower than the end of 17 to 1.
28%, a sub-optimal level among listed rural commercial banks.
Concerned about the loan rate / overdue loan rate respectively decreased 68bps / 7bps to 0 from the end of 17 years.
81% / 1.
37%, less stress on bad newborns.
The company’s bad identification is prudent and strict. Loans / non-performing loans overdue for more than 90 days have been below 100% since 15 years, and 1H18 dropped by 15pct earlier to 82%.
The provision coverage ratio improved in the third quarter of 2018, increasing 35 percentage points earlier to 229%.
The company’s 3Q18 capital adequacy ratio was 17.
09%, an increase of 2 earlier.
97 units, ranking first among all listed banks.
More than 3 billion convertible bonds are successively converted into stocks, and capital is expected to receive more supplements.
Investment suggestion: The company is located in southern Jiangsu with developed economy and fertile resources, perfect governance, deep cultivation of local small, medium and micro enterprises with distinctive characteristics, excellent profitability, and overall asset quality better than comparable peers.
We believe that the company’s overall operation is stable and the share of increased risks. If the company’s business 无锡桑拿网 structure or positioning is more prominent in the future, the pricing level will be significantly improved; at the same time, larger executive management holdings will also help the company’s stable operation.Provide strong support.
Taking into account the company’s major non-recognition and provisioning provisions, we lowered the company’s performance growth rate and expect the company’s 18/19 net profit growth rate to be 9.
6% / 9.
0% (was 11).
1% / 15.
8%), the current total corresponding to 18/19 PB is 1.
1. However, taking into account the company’s stable operating style and prudent risk control standards, as well as greater certainty in the performance of assets after the compression of assets, it also replaces the alternative valuation level and upgrades the investment rating from “neutral” to “recommended”.
Risk Tips 1) Asset quality is affected by the economic beyond expected range, and credit risk is exposed centrally.
The banking industry is closely related to the national macroeconomic development, and its asset quality is even more affected by the overall macroeconomic development growth rate and quality.
If the macro-economy exceeds expectations, it will inevitably cause the industry’s overall asset quality pressure and affect the disposal and recovery of non-performing assets, thereby affecting the company’s profit growth rate.
2) The policy budget is stronger than expected.
In the context of deleveraging and risk prevention, the breadth and depth of industry supervision have been continuously strengthened. Similar policies and regulatory plans such as new asset management regulations have been introduced. If the overall regulatory trend or the adjustment of policies in a certain area exceeds expectations, the industry andThe company’s operating stability caused adverse effects.
3) Systemic risks arise from market decline.
Bank stocks are an important component of large-cap stocks, and their overall rise and fall are closely related to market investment style.
If the overall market systemic risk declines, it may drive the industry to reduce the decline, thereby affecting the company’s performance.