Bank of Hangzhou (600926): The retail advantage continues to strengthen and urgently needs to supplement the core level

Event On April 25, Hangzhou Bank announced the 2018 annual report and the 2019 first quarter report.

In 2018 and the first quarter of 2019, the operating income increased by 20 respectively.

77%, 26.

64%; realizing a ten-year increase in net profit attributable to mothers.

94%, 19.

25%.

Brief comment 1. The growth rate of the first quarter of 1919 accelerated faster than the previous quarter, and gradually the profitability tried to stabilize and rebound. In 2018, the company achieved 170 operating income.

54 ppm, an increase of 20 in ten years.

77%; realized net profit attributable to mother 54.

12 ppm, an increase of 19 in ten years.

53%, both in terms of revenue growth and profit growth, 17 years earlier.

In a single quarter, 18Q4 revenue increased by 10.

64%, a decrease of 11 from the third quarter of the previous quarter.

62 averages; 18Q4 net profit attributable to mothers increases by 13 each year.

11%, down 9 from the third quarter of the previous quarter.

76 units.

In the first quarter of 2019, the company achieved operating income of 52.

0.94 million yuan, an increase of 26 in ten years.

64%, achieving net profit attributable to mother 18.

15 ppm, an increase of 19 in ten years.

25%.

The growth of performance has obviously rebounded from the previous year.

Profitability declined slightly in 18 years and is expected to stabilize and recover in 19 years.

In 18 years, the expected average ROE was 11.

01%, a decrease of 0 from the previous year.

33 averages, but the annualized increase in the first quarter of 19 has an average ROE of 14.

92%, an increase of 0 over the same period in 18 years.

The average of 68 is expected to stabilize and recover.

In 2018, the first quarter of 19 achieved EPS 0.

95 yuan and 0.

35 yuan, an increase of 6 each year.

74% and 16.

67%; BVPS at the end of 18 and the first quarter of 19 were 9 respectively.

20 yuan and 9.

66 yuan, an increase of 12 over the end of the previous year.

75% and 5.

00%.

2. Net interest income for 18 years increased by 14 each year.06%, but the growth rate in the first quarter has declined for 18 years, achieving net interest income of 139.

92 ppm, a ten-year increase of 14.

06%, of which interest rate income increased by 16 in ten years.

71%, interest expenses increase by 18 per year.

42%.

In 18 years, the NIM was 1.

71%, an increase of 6 units over the previous year, with a net interest margin of 1.

66%, 5 BP from the previous year.

Among them, the comprehensive yield of interest-earning assets increased by 24 BP from the previous year, mainly due to the increase in yields of loans and bond investments by 39 and 30 BP, respectively, but the yield on interbank assets decreased by 44 BP;In the previous year, it increased by 19 BP, mainly because the cost of deposits and bonds payable increased by 30 and 64 BP, respectively. Only the industry’s rejection cost decreased by 2 BP.

In the first quarter of 19, net interest income was 37.

00 ppm, an increase of 5 per year.

60%, an increase compared to the previous year, is expected to be mainly due to a narrower quarter of NIM.

3. The growth rate of non-interest income is accelerating. It is expected that the growth rate of income in the middle of 19 years will achieve 18 years of positive growth and 30% of non-interest income.

62 ppm, an increase of 65 in ten years.

13%, accounting for 17% of total revenue.

95%, an increase of 4.

.

82 units.

But growth mainly increased other non-interest income.

Event On April 25, Hangzhou Bank announced the 2018 annual report and the 2019 first quarter report.

In 2018 and the first quarter of 2019, the operating income increased by 20 respectively.

77%, 26.

64%; realizing a ten-year increase in net profit attributable to mothers.

94%, 19.

25%.

Brief comment 1. The growth rate of the first quarter of 1919 accelerated faster than the previous quarter, and gradually the profitability tried to stabilize and rebound. In 2018, the company achieved 170 operating income.

54 ppm, an increase of 20 in ten years.

77%; realized net profit attributable to mother 54.

12 ppm, an increase of 19 in ten years.

53%, both in terms of revenue growth and profit growth, 17 years earlier.

In a single quarter, 18Q4 revenue increased by 10.

64%, a decrease of 11 from the third quarter of the previous quarter.

62 averages; 18Q4 net profit attributable to mothers increases by 13 each year.

11%, down 9 from the third quarter of the previous quarter.

76 units.

In the first quarter of 2019, the company achieved operating income of 52.

0.94 million yuan, an increase of 26 in ten years.

64%, achieving net profit attributable to mother 18.

15 ppm, an increase of 19 in ten years.

25%.

The growth of performance has obviously rebounded from the previous year.

Profitability declined slightly in 18 years and is expected to stabilize and recover in 19 years.

In 18 years, the expected average ROE was 11.

01%, a decrease of 0 from the previous year.

33 averages, but the annualized increase in the first quarter of 19 has an average ROE of 14.

92%, an increase of 0 over the same period in 18 years.

The average of 68 is expected to stabilize and recover.

In 2018, the first quarter of 19 achieved EPS 0.

95 yuan and 0.

35 yuan, an increase of 6 each year.

74% and 16.

67%; BVPS at the end of 18 and the first quarter of 19 were 9 respectively.

20 yuan and 9.

66 yuan, an increase of 12 over the end of the previous year.

75% and 5.

00%.

2. Net interest income for 18 years increased by 14 each year.

06%, but the growth rate in the first quarter has declined for 18 years, achieving a net interest rate of 139.

92 ppm, a ten-year increase of 14.

06%, of which interest rate income increased by 16 in ten years.

71%, interest expenses increase by 18 per year.

42%.

In 18 years, the NIM was 1.

71%, an increase of 6 units over the previous year, with a net interest margin of 1.

66%, 5 BP from the previous year.

Among them, the comprehensive yield of interest-earning assets increased by 24 BP from the previous year, mainly due to the increase in yields of loans and bond investments by 39 and 30 BP, respectively, but the yield on interbank assets decreased by 44 BP;In the previous year, it increased by 19 BP, mainly because the cost of deposits and bonds payable increased by 30 and 64 BP, respectively. Only the industry’s rejection cost decreased by 2 BP.

In the first quarter of 19, net interest income was 37.

00 ppm, an increase of 5 per year.

60%, an increase compared to the previous year, is expected to be mainly due to a narrower quarter of NIM.

3. The growth rate of non-interest income is accelerating. It is expected that the growth rate of income in the middle of 19 years will achieve 18 years of positive growth and 30% of non-interest income.

62 ppm, an increase of 65 in ten years.

13%, accounting for 北京夜生活网 17% of total revenue.

95%, an increase of 4.

.

82 units.

But growth mainly increased other non-interest income.

18 years to achieve intermediate business income.

8.3 billion, a decrease of 3 per year.

99 million yuan, a decrease of 26.

83%, accounting for 6 of total revenue.

94%, a decrease of 4 from the previous year.

51 units.

Among them, the commission for custody and other fiduciary business exceeds 3.

62 trillion, a decrease of 50.

90% is the main source of the decline in middle income. At the same time, bond underwriting, financing advisory and bank card business also declined13.

75%, 20.

58% and 39.

73%, only agency business, settlement settlement business and guarantee commitment business increased by 23 respectively.

63%, 23.

42% and 36.

96%.

Other non-interest income amounted to 18.

79 trillion, an increase of 691 in ten years.

62%.

Among them, investment income increases by 17 each year.

29 trillion, an increase of 209.

55%; gains and losses from changes in fair value increase by 75 per year.

220,000 yuan, exchange loss gains and losses fell by 76.

2.3 billion.

In the first quarter of 19, the growth rate of non-interest income further accelerated.

In the first quarter, non-interest income was 15%.

94 ‰, an increase of 9 per year.

180,000 yuan, a growth rate of 135.

67%, of which intermediate business income increases by 0 every year.

210,000 yuan, an increase of 7.

37%, other non-interest income increases by 8 every year.

97 ppm, an increase of 229.

twenty four%.

It is expected that annual intermediate business income will achieve positive growth.

4. The asset quality continued to improve, and the potential badness was severely reduced.

The non-performing rate continued to decrease from the previous month.

At the end of 18, the balance of non-performing loans was 50.

850,000 yuan, an increase of 12 over the beginning of the year.

51%; Non-performing loan financing1.

45%, an earlier decrease of 14 BP.

In the first quarter of 19, the non-performing ratio further decreased by 5 BP to 1.

40%.

The proportion of attention-oriented loans decreased significantly by 126 BP.

At the end of 18, the outstanding loan balance44.

19 trillion, a significant drop of 45 compared to the earlier period.

39%, accounting for 1.

26%, down 1 from the beginning of the year.

59 uniforms.

At the end of the first quarter of 19, the proportion of attention categories was 1.

07%, continued to drop 9 BP compared to the end of last year.

The proportion of loans overdue for more than 90 days fell by 83 BP in the initial period.

At the end of 18 years, loans overdue for more than 90 days 3.

.

77 trillion, down 30 a year.

20%, accounting for 1 of total loans.

07%, 83 blood pressure drops compared with the beginning of the year, 61 blood pressure drops compared with the end of the second quarter.

At the end of the year, the “scissors gap” between loans overdue for more than 90 days and non-performing loans was 74.

07%, down 45% from the beginning of the year.

33 units.

The provision for provisioning has been significantly increased.

At the end of 18 years, provisions covered 256 implants.

00%, an increase of 44 over the beginning of the year.

97 units; loan-to-loan ratio is 3.

71%, an increase of 0 from the beginning of the year.

35 units.

In the first quarter of 19, provision coverage continued to rise8.

50 up to 264.

50%, while the loan-to-loan ratio remains unchanged.

5. The retail transformation effect is remarkable. The retail non-performing rate has dropped sharply for 18 years, and the company’s total assets have reached 9,210.

56 trillion, an increase of 10 earlier.

57%.

Among them, the loan budget is 3504.

780,000 yuan, an increase of 23 from the beginning of the year.

48%.

The retail transformation effect is remarkable.

The performance was as follows: (1) On the asset side, the proportion of retail loans continued to rise.

At the end of 18, the retail loan balance was 1,277.

460,000 yuan, an increase of 36 in ten years.

35%, 12 higher than the total loan.

87 units.

The proportion of retail loans also reached 36.

45%, up 3 earlier.

44 averages, up 2 from the end of the third quarter.

The 21 averages are at the highest level among city commercial banks.

(2) On the debt side, retail deposits have grown significantly.

At the end of 18, retail deposits reached 988.

50 ppm, an increase of 34 in ten years.

04%, which is 15 higher than the total deposit.

29 digits, accounting for 18.

55%, which is higher than 2 earlier.

12 units.

(3) In terms of risk control, the decline in the NPL ratio of retail loans is the source of the decline in the overall NPL ratio.

At the end of 18 years, non-performing retail loans replaced zero.

77%, an earlier decline of 1.

The 02 averages continued to fall by 27 BPs compared to the end of the second quarter, while the NPL ratio increased by 35 BPs from the beginning.

(4) In terms of business development, the company focused on the two customer groups of “household customers” and “paid customers”, focusing on the development of personal housing mortgage and credit loans, and achieved leapfrog development.

At the end of 18, the company’s retail financial line loan balance was 850.

44 trillion, an increase of 34.

11%, of which, “rooster loan” (online credit loan products) loan balance 274.

19 trillion, an increase of 98.

03%; mortgage loan balance 560.

830,000 yuan, an increase of 33.

71%.

The defect rate of both parts is only 0.

09%, down 4 BP from the end of last year.

6. Capital adequacy continued to decline, and it was urgently necessary to replenish core tier 1 capital. At the end of 18 years, the core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio, and capital adequacy ratio were 8, respectively.

17%, 9.

91% and 13.

15%, down by 0 compared with the beginning of the year.

52, 0.

85 and 1.

15 units.

At the end of the first quarter of 19, the three capital adequacy ratio indicators continued to fall by 12, 24, and 37 BP to 8, respectively.

05%, 9.

67% and 12.

78%.

The core tier one capital adequacy ratio is 7.

The 5% red line has a difference of only 55 BP and urgently needs to replenish capital.

It is expected that the probability of the refinancing plan for the private placement will be converged this year.

7. Investment suggestion We are optimistic about the investment opportunities of Hangzhou Bank from both short-term and medium-term perspectives.

Judging from the results of the 2018 annual report and the first quarter of 2019: First, the company’s deposits and loans have grown rapidly, especially the retail deposits and loans have grown at about 35%; Second, the interest rate spread has further rebounded.The main driving force for performance growth is expected to continue to improve in the future. Third, asset quality continues to improve, with loan growth overdue for more than 90 days declining, while all bad replacements, and the proportion of attention-oriented loans falling by nearly 1.

3 units; Fourth, the company’s performance ushered in an inflection point, and surpassed market expectations, and revenue in 18 years increased by 20.

96%, net profit attributable to mothers increased by 18.

96%, the growth rate of revenue and net profit attributable to mothers in the first quarter of 19 accelerated further.

If it is not due to the accrual of accruals, performance growth may accelerate.

The potential for future badness has not been confirmed.

Fifth, the provisioning strength has increased, and the ability to resist risks has increased.

In addition, Hangzhou Bank ‘s retail business development strategy is clear and consolidated, and due to its good local customer base, it is expected that the advantages of the retail business will continue to strengthen and will eventually be realized on the asset side.

The company’s retail business transformation strategy has been launched, and considerable results have been achieved over the course of a year, with the retail loan ratio further increased to 36.

45%, and the decline in retail non-performing rate is very significant.

In the future, the company will gradually improve its consumer credit business. The retail spread will further increase, and the retail’s contribution to the company’s total revenue and profits will further increase.

We expect the company’s net profit attributable to mothers to increase by 21% and 23% in 2019 and EPS respectively by 1.

28, 1.

57, the corresponding PB is 0.

74, 0.

70, the corresponding PE is 6.

77, 5.

51.

Maintain “Buy” rating and target price of 11 yuan in six months.