Depth * Corporate * Wuxi Bank (600908): Asset-side earnings downturn dragged down poor performance poor identification standards tightened

The profitability of Wuxi Bank has maintained steady growth, and the spread performance has been narrowed slightly by the decline in asset-side income. The growth growth in 2018 is under pressure.

In terms of asset quality, the non-performing ratio continued to decline, the bad confirmation tended to be severe, the provision coverage was significantly improved, the overall asset quality remained stable, and Wuxi’s overweight rating was maintained.

  Key points supporting the rating The steady growth of earnings was in line with expectations, and the decline in asset-side earnings dragged down the gap. Wuxi Bank’s 2018 net profit increased by 10%.

1%, the growth rate decreased slightly by 1 compared with the first three quarters.

The 7 averages were mainly due to the increase in the provision of accruals.

The company’s 18-year revenue increased by 12% each year, of which the net fee income continued to adjust due to regulatory influence, and fell 47 each year.

4%, accounting for only 2 of revenue.


Net interest income increased by 11 in 18 years.

3%, the growth rate compared with the first three quarters of the quarter 2.

The eight averages are expected to be affected by the narrowing of the interest margin in the fourth quarter.

Wuxi Bank’s highest net interest margin is 2.

16%, lower than the end of 2018H 2.

19% level 3BP.

The narrowing of interest margin is mainly affected by the decline in asset-side income. In the second half of 18, Wuxi Bank broke out the issuance of credit, which translated into a decline in the price of market funds. The return on bond investment assets, which accounted for 33% of assets, fell, Dragging down the asset-side yield by 27BP compared to 2018H, the decline more than the cost of 南宁桑拿 the liability side.

  At the end of the fourth quarter, the total assets of Wuxi Bank increased by 13% / 6% from the previous quarter, of which loans increased by 14% / 2 from the same quarter.

4%, it is expected that the proportion of total assets is basically stable.

However, in the second half of the year, Wuxi Bank slowed down the rate of credit issuance, and its credit ratio declined slightly compared to 2018H.

8 up to 47.


  Structurally, corporate loans are the main credit investment direction of Wuxi Bank (73.


As of the end of the fourth quarter, the securities investment assets of Wuxi Bank increased by 8% / 12% from the same period last month, and the proportion of total assets increased by 3% to 33% compared to 2018H. Under the background of the decline in market capital interest rates, securities 杭州桑拿网 investments with relative value of returnsThe increase in the proportion has dragged down the spread performance.

On the debt side, bank deposits in Wuxi increased by 8% / 0% month-on-month respectively. Deposits in the fourth quarter grew slowly due to the influence of year-end factors.

Structurally, the proportion of demand deposits declines by 1 every year.

28 up to 30.

8%, indicating that the company’s deposit growth is under pressure, and its future performance deserves attention.

  At the end of the fourth quarter, the non-performing ratio of Wuxi banks decreased by 4BP to 1 from the previous month.

24%, 4 consecutive quarters of improvement.

  We estimate the company’s single quarter bad production rate in the fourth quarter.

16%, an increase of 108BP month-on-month, mainly due to the company’s compliance with credit classification standards, so we can see that Wuxi Bank’s overdue loan / non-performing loan ratio over 90 days has dropped significantly compared to 2018H by 39.

6 up to 82.

5%, the bad confirmation standard becomes stricter.

At the same time, Wuxi Bank further increased the provision for accrual in 2018 (+28.

(6% compared with the same period last year), the provision coverage ratio was further increased by 41 percentage points to 235%, and the ability to withstand risks was further enhanced.

  It is estimated that we cut Wuxi Bank’s profit growth rate to 11 in 19/20.

9% / 13% (The original forecast was 14% / 13.

7%).Currently, the corresponding PE for 2019/20 is 10.

11x / 8.

95x, PB is 1.

12x / 1.


  The major risk assets facing the rating are expected to exceed expectations, and financial supervision exceeds expectations.