The growth rate of bank profits rebounded in the third quarter. Is the bank’s ＂good days＂ back？

　　"The good days of banks have come to an end", which is a common saying in recent years. Indeed, after experiencing the impact of the loss of deposits, the narrowing of interest margins and the decline in profit growth, the days of traditional banks are indeed not as good as in previous years. However, the third quarterly report of listed banks recently revealed that the performance of listed banks has picked up in the first nine months of this year. Is this a temporary rebound or a trend improvement? What new changes have taken place in banks under the new environment? Can the past profit engine continue to exert its strength? Has the industry risk that has attracted much attention been alleviated? For the focus of these markets, a lot of information can be read from the three quarterly reports of 39 listed banks.

　　What does profit growth depend on?

　　The important factor driving the growth rate of bank profits is still the level of interest margin, but banks need to change the growth model that relies too much on interest income.

　　In the third quarter of this year, the growth rate of bank profits rebounded, and the growth rate of net profit of the five major banks was higher than that at the end of last year; Among the joint-stock banks, the net profit of Postal Savings Bank and China Merchants Bank maintained double-digit growth; Among city commercial banks and rural commercial banks, the net profit of Nanjing Bank, Bank of Ningbo Bank and Hangzhou Bank increased rapidly, with a year-on-year growth rate of over 10%.

　　During the year, the bank’s net interest margin rebounded moderately from the bottom, which was one of the important reasons for its steady profit growth. "First of all, since the fourth quarter of last year, there have been significant changes in policy and capital, liquidity is relatively tight, and capital prices naturally go up. Secondly, since the second quarter of this year, the cost of obtaining funds for banks has not increased much, while the demand for credit is relatively strong, and the upward speed of loan interest rates has accelerated, which has led to a slight rebound in bank spreads. Typical is the housing mortgage loan, and now some banks’ first suites in mortgage interest rates will rise by 10%. " Qiu Gaoqing, chief researcher of the Bank of Communications Financial Research Center, said.

　　According to the report of BOC International, the net interest margin of listed banks increased by 3 basis points in the third quarter of this year compared with the second quarter, and the overall improvement of interest margin of large banks increased by nearly 4 basis points, while the level differentiation of interest margin of small and medium-sized banks was still obvious.

　　The decline in non-interest income narrowed, which also reduced the drag on net profit. Qiu Gaoqing analyzed that in the first half of the year, due to the impact of macro-prudential policies and stricter industry supervision, the income growth of bank wealth management and interbank business was limited. Some small and medium-sized banks account for a relatively large proportion of non-interest income, with a high base, showing negative growth year-on-year, and a few banks even have a large decline. Since the second half of the year, banks have gradually adapted to the strict regulatory environment, increased the expansion of non-interest income in other fields, and the decline of non-interest income has narrowed.

　　Take China Merchants Bank as an example. In the third quarter of this year, China Merchants Bank stood out from the rest, with a net profit of 58.805 billion yuan, up 12.78% year-on-year, ahead of other banks. The main reason is that the decline of non-interest net income of China Merchants Bank in the third quarter further narrowed from 8.23% in the first half of the year to 2.1%, and the intermediary business stopped its downward trend and began to resume its upward trend.

　　Although the performance has improved, compared with previous years, the market environment faced by banks has changed, the pace of interest rate marketization reform has been kept, and the downward trend of interest margin level is difficult to reverse. Banks need to change their growth model that relies too much on interest income. Mckinsey’s recently released "China Bank Value Creation Ranking (2017)" analyzes the bank value creation of 40 representative banks. The report points out that the retail business of banks is on the rise, the bargaining power of retail customers is lower than that of corporate customers, and the risk of retail loan concentration is small. Compared with public business, it can better cope with the industry cycle and has stronger anti-risk ability, which is worth increasing investment by banks.

　　Why are banks also "money tight"?

　　Rectify financial chaos, prevent the financial industry from idling and self-expanding, and stop the rapid growth of banking assets and slow down the growth rate.

　　Although the performance has improved, under the background of risk prevention and deleveraging, the "good days" of making money by paving stalls and rushing to scale are no longer there, and many banks also feel that money is tight.

　　At the end of 2016, the assets of China’s banking industry ranked first in the world, and banks with huge bodies appeared in the forefront of the list, which stood out from the rest of the world. This year, the living environment of the banking industry has changed, and the regulatory authorities have made great efforts to rectify financial chaos and prevent the financial industry from idling and self-expansion, especially to strictly investigate the interbank, wealth management and off-balance-sheet business of the banking industry. The growth of banking assets has stopped the express train and the growth rate has slowed down.

　　"By vigorously rectifying the chaos in the banking industry, funds ‘ Disengage from reality to emptiness ’ The momentum has been initially contained. " Recently, Guo Shuqing, Chairman of the China Banking Regulatory Commission, said that since the beginning of this year, the interbank assets and liabilities of the banking industry have both contracted, each by about 2 trillion yuan, the growth rate of wealth management products has slowed down significantly, and the growth of entrusted loans has declined for the first time since 2008.

　　The impact of strong supervision is also clearly written in the third quarterly report of the bank. According to the report of BOC International, the growth rate of the industry scale continued to decline. In the third quarter, the overall growth rate of the banking industry continued to decline compared with the second quarter. The year-on-year growth rates of large commercial banks, joint-stock commercial banks and city commercial banks decreased by 0.3, 1.7 and 1.8 percentage points respectively compared with the end of the second quarter. Among them, CITIC Bank’s assets at the end of the third quarter decreased significantly compared with last year, and the scale of "shrinking the table" reached 394.1 billion yuan.

　　Correspondingly, the growth of bank deposits is slightly weak. "The traditional sources of deposits in banks are facing diversion, and this year, the regulatory authorities have strengthened supervision over wealth management and interbank business, which has led to a significant reduction in the sources of liabilities of some banks, and corporate deposits are not very stable. This year, the pressure on bank deposits is not small and funds are relatively tight." Dong Ximiao, a senior researcher at Chongyang Financial Research Institute of Renmin University of China, said.

　　The bank’s "lack of money" showed up in the third quarterly report. Short-term liabilities such as borrowing from the central bank and borrowing funds grew rapidly year-on-year, which is the main source of the growth of some banks’ liabilities. For example, the loans of Agricultural Bank of China, Ping An Bank and Nanjing Bank increased by 24.88%, 985.61%, 246.19% and 135.51% respectively.

　　What do you think of bank risks?

　　From "Shuang Sheng" to "single drop", the trend of asset quality is further consolidated, but we should be alert to liquidity risks.

　　Balancing income and risk is the essence of bank management. For banks, whether they can relive the "good days" in the past and effectively prevent and control risks is a key link.

　　What is the risk status of the banking industry? Recently, the data released by the China Banking Regulatory Commission shows that the asset quality of the banking industry has remained stable since the beginning of this year, with the non-performing loan ratio decreasing by 0.04 percentage points and the interest-related loan ratio decreasing by 0.47 percentage points. At the end of September, the capital adequacy ratio of commercial banks was 13.3%, the provision coverage ratio was 179.5%, and the liquidity ratio was 48.3%, all of which maintained a good level, and the banking industry’s ability to resist risks was enhanced.

　　"The positive trend of asset quality has been further consolidated. In the third quarter, the non-performing loan balance and non-performing loan ratio of large commercial banks gradually changed from Shuang Sheng to a single drop in non-performing loan ratio, from ‘ Shuang Sheng ’ To ‘ Single drop ’ It is a more gratifying change. " Dong Ximiao said.

　　"Due to the good performance of China’s macroeconomic fundamentals this year and the full exposure of non-performing assets of commercial banks in previous years, the pressure on non-performing assets in the banking industry has eased. According to the data disclosed by listed banks in the third quarter, the NPL ratio of most banks decreased steadily and the growth rate of NPL balance decreased, and the NPL balance of some banks also showed a downward trend. For listed banks with sufficient provision in the early stage, the provision provision strength has decreased with the improvement of asset quality, which has brought positive contributions to profit growth. " Qiu Gaoqing said.

　　Although the risk has been alleviated, it should not be taken lightly. Dong Ximiao said that from the operating conditions of listed banks that have published the third quarterly report, the overall operation of listed banks is stable and the risks are controllable, but it is still necessary to pay attention to the liquidity risks of banks. At present, the main sources of bank liabilities are short-term liabilities, that is, deposits within one year, bills receivable, accounts receivable, etc. This model may not be able to continuously support longer-term bank assets, that is, credit business over one year. In the next step, banks need to optimize the term structure of assets and liabilities and enhance their active debt capacity.

　　Dong Ximiao suggested that we should pay attention to credit risk in the future, further strengthen credit risk management and control, and reduce its erosion of net profit.

　　■ Link

　　All three quarterly reports were released — —

　　The performance of listed companies is improving

　　As of October 31st this year, 1,368 listed companies in Shanghai Stock Exchange disclosed the third quarterly report as scheduled, and 2,051 listed companies in Shenzhen Stock Exchange disclosed the third quarterly report. The data shows that the overall situation of high-quality development of listed companies in Shanghai and Shenzhen stock markets is taking shape, and the effectiveness of supply-side structural reform is further manifested.

　　Operating income and net profit have doubled, and the inherent quality of real economic growth has improved significantly. According to statistics, in the first three quarters, the Shanghai stock exchange companies realized a total operating income of 20.67 trillion yuan, a year-on-year increase of 17.67%; The net profit was 2.04 trillion yuan, a year-on-year increase of 16.68%, and nearly 60% of the companies achieved growth. Among them, the real economy grew steadily, and non-financial listed companies realized a total operating income of 16.08 trillion yuan and a net profit of 0.76 trillion yuan, up 21.29% and 39.52% respectively. Listed companies in Shenzhen achieved an average total operating income of 3.523 billion yuan, a year-on-year increase of 25.6%, and an average net profit attributable to shareholders of the parent company of 258 million yuan, a year-on-year increase of 25.93%; Excluding the financial industry, the average total operating income and net profit of a single company increased by 25.79% and 29.4% respectively.

　　The reform of state-owned enterprises has achieved remarkable results, and the vitality of private enterprises continues to show. In the first three quarters, the layout of the state-owned economy was optimized, and structural adjustment, strategic reorganization and mixed ownership reform continued to advance, which greatly stimulated the vitality, motivation and potential of the state-owned economy. In the first three quarters, the state-owned enterprises in Shanghai achieved operating income of 17.69 trillion yuan, a year-on-year increase of 15.41%; The net profit was 1.82 trillion yuan, a year-on-year increase of 14.78%. Private enterprises continued to maintain their vitality, achieving a total operating income of 2.97 trillion yuan, a year-on-year increase of 33.21%; The net profit was 0.22 trillion yuan, a year-on-year increase of 35.44%.

　　Small and medium-sized board companies accelerate industrial upgrading through endogenous growth and extension expansion, and strategic emerging industrial companies on the Growth Enterprise Market develop at a high speed. As the cradle of cultivating industry leaders and leading enterprises, small and medium-sized board has gathered a large number of excellent companies in sub-sectors and played a good role in demonstrating and guiding. More than 60% of the companies have achieved double growth in revenue and profit. In the first three quarters, the performance of small and medium-sized board companies rose steadily, with an average total operating income of 3.031 billion yuan, a year-on-year increase of 27.33%; The net profit was 228 million yuan, a year-on-year increase of 23.29%. Growth Enterprise Market (GEM) maintained rapid growth. In the first three quarters, listed companies on GEM achieved an average total operating income of 1.083 billion yuan, up by 32.77% year-on-year. The main driving force for its growth came from the rapid development of strategic emerging industries. From the perspective of sub-industries, the growth rate of new energy automobile industry, energy conservation and environmental protection industry, new energy industry and high-end equipment manufacturing industry is outstanding.

　　The annual performance of listed companies is expected to improve. As of October 31, a total of 919 listed companies in Shenzhen disclosed the 2017 annual performance forecast. Among the 27 companies on the main board that disclosed the 2017 annual performance forecast, 74% expect their performance to grow in the same direction or turn losses into profits; Among the 883 companies in the small and medium-sized board that disclosed the 2017 annual performance forecast, 87% expect the performance to grow in the same direction or turn losses into profits; Of the nine companies that disclosed the 2017 annual performance forecast on GEM, 89% expect their performance to grow in the same direction or turn losses into profits. Nearly 80% of the listed companies in Shenzhen that disclose the performance forecast expect the 2017 annual performance to go up, and the annual performance is expected to continue to improve.

　　(Chai Jin)