Depth-Company-Yu Nong Commercial Bank (601077): Outstanding retail business with outstanding profitability and leading peers

Depth * Company * Yongnong Commercial Bank (601077): Retail business features outstanding profitability, leading peers

Chongqing Rural Commercial Bank is mainly located in Chongqing. It is the rural commercial bank with the largest domestic assets and the most widely distributed branches.

The company’s retail market share in Chongqing has been at the leading level, benefiting from a good local economic environment, and its development potential is worth looking forward to.

The main shareholders of Yunong Commercial Bank are Chongqing State-owned Assets Supervision and Administration Commission and local enterprises, and have maintained good cooperative relations with local governments.

The company’s net interest margin is at the forefront of the industry and its asset quality is stable.

Key points of support level The largest domestic commercial and commercial bank in China deeply cultivates the local market.

Chongqing Rural Commercial Bank is mainly located in Chongqing, with total assets of 10,342 trillion and a net profit of 86 as of 3Q19.

300 million, regardless of asset size and net profit, to the country’s largest rural commercial bank.

Chongqing is the only municipality in the country with a 上海夜网论坛 provincial-level regional size. The regional economy has maintained a high growth momentum, providing a good environment and regional depth for the development of Chongqing Rural Commercial Bank.

The top three shareholders of the company are local state-owned assets and financial holding companies, holding a total of 23 shares.

7%, the remaining more than 150 corporate shareholders are local enterprises in Chongqing, the company’s development is highly tied to the local economy.

Individual business features are outstanding, and retail development potential is expected.

As the country’s number one rural commercial bank, Yu Rural Commercial Bank’s personal business has a prominent competitive advantage in regional expansion.

On the debt side, the market share of personal deposits in Chongqing has remained the first year (close to 30%), and personal deposits account for 74% of the 2019H deposit structure.

3%, far above the average of listed rural commercial banks.

On the asset side, the market share of personal loans is also in the forefront of Chongqing (around 11%), and the largest retail bank in the region is firmly affiliated.

At the same time, the company ‘s retail loan share and retail revenue contribution have steadily increased in the past two years. The structure of non-mortgage loans accounted for over 50% of the structure. Benefiting from the region ‘s expanding and developed tertiary industry and consumer demand for consumer consumption, regional retail willThe business potential is worth looking forward to.

ROE is ahead of comparable peers, and the asset-side structure is gradually optimized.

The profitability of Yunong Commercial Bank is at the forefront of the industry, with an annualized ROE of 15 in 2019H.

7%, ranking first among listed rural commercial banks.

It can be seen from the first-level ROE that the company’s higher ROE is mainly based on rich retail customer resources. Net revenue expenses account for a much higher percentage of revenue than the average of listed rural commercial banks. At the same time, cost control is effective and asset quality is stable.

As for the interest margin, as of 2019H, the company’s net interest margin is 2.

35%, its absolute value ranks high among the listed banks, and it is in the middle of the listed rural commercial banks.

At present, the proportion of corporate credit assets in rural commercial banks is relatively low (2019H is 38.

8%), but it has risen significantly in the past two years. It is expected that the gradual adjustment and optimization of the asset-side structure will positively support the company’s interest margin and ROE performance in the future.

The overall asset quality is stable and adequate provisions are made.

Yu Nong Commercial Bank’s asset quality is generally stable, with a 2019H NPL ratio of 1.

25%, attention-oriented loans accounted for 2%.

41%, a nominal level among comparable peers.

Moreover, the company’s NPL determination is strict. As of 2019H, the loan / non-performing loan balance overdue for more than 90 days is 78.

8%.

As of the end of 2019H, the company’s provision coverage was re-368.

8%, second only to Changshu Bank in listed rural commercial banks, the transfer of risk resistance capabilities to support the stable growth of the business.

We estimate that EPS of Yunong Commercial Bank will be 1 in 20/21.

23/1.

43 yuan, the current total corresponding to 20/21 PB is 0.

75/0.

67, PE is 5.

35/4.62. The first coverage is given an overweight rating.

The main risks facing the rating The economic downturn has led to worse-than-expected deterioration in asset quality, and Sino-US trade friction has further escalated.

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