瑞信-中国-银行业-中国银行业2019年展望：力求平衡-2019.1.7-82页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.7 January 2019 Asia Pacific/China Equity Research Banks China Banks Sector Research Analysts Chung Hsu,CFA 886 2 2715 6362 chung.hsucredit- Chien Po Huang 886 2 2715 6342 chien-po.huangcredit- Ethan Wang 852 2101 6756 ethan.wangcredit- THEME 2019 Outlook:Striving for a fine balance Figure 1:China banks profit growth will slow to 5.4%in 2019 Source:Company data,Credit Suisse estimates Slower growth triggers more policy support.In 2019,China banks will continue to be torn by a slowing economy but more policy support.Policy will stay accommodative and provide sentiment support for banks but profits will see pressure as big banks start to show NIM impact from lower market rates along with slower loan growth.As the government continues to add stimulus and strives to keep the system supported,it faces a growing challenge of finding that fine balance of providing enough stimulus while ensuring the de-leveraging effort is not questioned.Against this backdrop,we believe banks will be pressured to lend more but given the increased macro uncertainties and provision requirement,we believe banks will be reluctant to do so.Hence,we maintain our 9%loan growth estimate for the 11 banks under our coverage,which is a moderate slowdown from the 9.5%in 2018.Lower profit estimates for big banks.We lower profit growth estimates for the sector to 5.4%in 2019 from 7.6%,mostly to reflect a 2 bp lower NIM for the big banks on lower market rates.We keep our NIM forecasts for JSBs,however,offset by lower wholesale funding and faster retail loan growth.We expect credit cost to stay elevated(flat YoY)despite banks having guided for lower new NPL formation given(1)IFRS 9;(2)weak macro;and(3)more stringent NPL recognition will keep provisions high.Valuation and stock calls.The sector is trading near trough valuation of 0.7x P/B and pricing for 10%+NPLs vs our estimate of 6-8%.At the current valuation,the sector has proved to be more defensive judging from 2H18s relative performance.On stock calls,we further increase our preference for JSBs and,after our upgrade of CMB/Citic to Outperform in Jul-2018,we also upgrade PAB to Outperform.For the big-4,we keep most of our Outperform but downgrade ABC-A to Neutral after lowering profit estimates and target price.Among the big banks,BOC is our preferred pick.35.2%29.5%16.4%11.8%6.9%0.3%0.5%4.7%7.4%5.4%6.1%0%10%20%30%40%201020112012201320142015201620172018E2019E2020EChina Banks Sectors net profit growth每日免费获取报告1、每日微信群内分享5+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、每月汇总500+份当月重磅报告（增值服务）扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。7 January 2019 China Banks Sector 2 Focus charts Figure 2:China banks outperformed MSCI China by 10.3%year-to-date Figure 3:China banks are currently trading near their historical trough P/B Source:the BLOOMBERG PROFESSIONAL service,Credit Suisse estimates Source:the BLOOMBERG PROFESSIONAL service,Credit Suisse estimates Figure 4:China interbank rates and bond yields have declined notably since May 2018 Figure 5:Mixed NIM change in 2019 for China Banks Source:CEIC,Credit Suisse estimates Source:Company data,Credit Suisse estimates Figure 6:We expect big four banks operating income growth to slow to 5.6%in 2019 Figure 7:We expect big four banks profit growth to slow to 4.4%in 2019 Source:Company data,Credit Suisse estimates Source:Company data,Credit Suisse estimates-6%-4%-2%0%2%4%6%8%10%12%14%16%Jan-18Jan-18Feb-18Mar-18Mar-18Apr-18May-18May-18Jun-18Jul-18Jul-18Aug-18Sep-18Oct-18Oct-18Nov-18Dec-18Dec-18MSCI China Banks Indexs relative performance to MSCI China0.00.51.01.52.02.5Dec-09Apr-10Aug-10Dec-10Apr-11Aug-11Dec-11Apr-12Aug-12Dec-12Apr-13Aug-13Dec-13Apr-14Aug-14Dec-14Apr-15Aug-15Dec-15Apr-16Aug-16Dec-16Apr-17Aug-17Dec-17Apr-18Aug-18Dec-18CS China Banks 1 year forward P/BAverage+1d-1d+2d-2d(x)2.02.53.03.54.04.55.05.5Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18China 1Y%China 5Y%China 10Y%China 3M I/B%China overnight%8543310-2-2-3-3-4-20246810MSBPABCMBCEBCITIC BCOMBOCICBCPSBCCCBABC2019 NIM change for China banks(bps)23.7%13.0%10.1%10.6%4.5%-3.2%4.5%8.9%5.6%6.0%-5%0%5%10%15%20%25%30%20112012201320142015201620172018E2019E2020EBig four banks operating income growth24.9%15.1%11.6%6.5%-0.7%-0.7%4.2%6.5%4.4%5.0%-5%0%5%10%15%20%25%30%20112012201320142015201620172018E2019E2020EBig four banks profit growth 7 January 2019 China Banks Sector 3 2019 Outlook:Striving for a fine balance Slowing growth triggers more policy support In 2019,China banks will continue to be torn by slower economic growth but more policy support.We believe the policy backdrop will stay accommodative as the government strives to keep the system supported,which will provide sentiment support given the sector is also trading at near-trough valuation.Notably,in 2018,this policy and valuation support helped China banks to outperform both MSCI China and the regional financial index by 10.3%and 4.2%.However,more policy support at this stage will continue to pressure market rates and along with our economic teams estimate of slower nominal GDP growth of 8.0%in 2019 vs 9.2%in 2018,loan growth will also moderate,pressuring bank earnings.Another key challenge that the government will increasingly face in 2019 is how to find that fine balance of providing enough stimulus to support the system while ensuring the de-leveraging effort is not questioned.Under this backdrop,banks will be pressured to lend more to support the real economy,though given the macro uncertainties and higher provision requirement,we believe banks will be reluctant to lend more.Lower profit growth estimates for the big banks We lower our profit estimates for China banks to 5.4%in 2019 from 7.6%originally,mostly to reflect a 2 bp lower NIM for big banks(vs the original estimate of a 3 bp higher NIM)due to a 59 bp drop in market rates since mid-2018.We note the NIM impact for JSBs,on the other hand,will be modest,offset by lower wholesale funding and faster growth in high yield retail loans.We maintain our 2019 loan growth estimate of 9%for banks under our coverage,a moderate slowdown from the 9.5%in 2018,though we continue to expect loan growth to tilt to retail loans.By maintaining our assumption of moderate fee/non-interest income growth and banks pacing their opex amid slower revenue,we model for operating income growth to slow to 6.4%in 2019 from our previous estimate of 7.2%(flat vs 2018s).Meanwhile,we maintain our flat YoY credit cost estimate for 2019 despite many banks guiding for lower new NPL formation as we expect banks to keep provisioning high due to IFRS 9 and more stringent NPL recognition.We also note a slower macro and deterioration in our proxy NPL data suggests the system is building more NPL pressure,though at this juncture,this is seen more in smaller city/rural commercial banks.Overall,our 2019 net profit estimates for the sector are about 4%below consensus.Sector valuation and stock calls The sector is currently trading near its historical trough valuation of 0.7x P/B and pricing for more than 10%system NPLs vs our estimate of 6-8%.At the current valuation,the sector has proved to be more defensive(it outperformed both the China market and regional financials in 2018),especially given the view that the government will continue to ease to prevent a hard landing for the economy.On stock calls,we further increase our preference for JSBs where we expect to see stronger operating momentum.After our upgrade of CMB/Citic Bank to Outperform in Jul-2018,we are upgrading Ping An Bank to Outperform for its highest retail loan growth with one of the highest retail unit profit among our coverage.We also believe PABs extra provisions since 2016 to clean up legacy micro SME NPLs could come to its final stage and potentially set up for substantial net profit improvement as credit costs normalise.For big banks,we keep most of our Outperform ratings for the big-4 banks but lower target prices along with operating profit estimate adjustments.We downgrade ABC-A to Neutral after a target price adjustment and limited upside.Among the big banks,BOC is our preferred pick given its better NIM resilience and lower valuation(0.5x P/B)versus other big banks(0.6-0.7x).In 2019,China banks will continue to be torn by slower economic growth but more policy support We lower profit growth estimates for the sector to 5.4%in 2019 from previous 7.6%,mostly to reflect lower NIM We further increase our preference for JSBs and upgrade PAB to OUTPERFORM 7 January 2019 China Banks Sector 4 Valuation summary Figure 8:China Banks valuation summary Note:Priced as of 3 January 2019.O=Outperform;N=Neutral;U=Underperform.Source:Reuters,Credit Suisse estimates Figure 9:We lower our 2019-20E by 2-5%mostly to reflect lower NIM estimates for the big banks(Rmb mn)CS net profits(current)CS net profits(previous)Earnings revisions 2018 2019 2020 2018 2019 2020 2018 2019 2020 ABC 202,790 210,685 223,096 203,110 220,770 241,847 0%-5%-8%BOC 177,296 185,794 195,696 178,903 193,510 213,297 -1%-4%-8%CCB 255,635 266,404 278,332 257,853 269,569 282,850 -1%-1%-2%ICBC 298,316 311,888 326,437 300,190 319,805 349,037 -1%-2%-6%PSBC 54,526 58,257 65,445 54,534 62,235 70,998 0%-6%-8%BoCom 71,355 75,308 79,133 71,097 76,625 82,767 0%-2%-4%CMB 80,660 91,631 101,876 80,691 91,285 101,577 0%0%0%CITIC 44,366 49,512 54,957 44,366 49,494 54,994 0%0%0%CEB 31,879 34,185 36,363 32,267 34,351 37,251 -1%0%-2%MSB 53,136 54,213 57,189 52,504 54,413 57,444 1%0%0%PAB 24,199 26,426 29,412 24,199 26,190 27,683 0%1%6%Sector 1,294,157 1,364,302 1,447,935 1,299,715 1,398,247 1,519,744 0%-2%-5%Source:Company data,Credit Suisse estimates Figure 10:Our 2019-20E net profit is 3-6%below consensus mainly due to lower big bank profits(Rmb mn)CS net profit Consensus net profit CS versus consensus 2018 2019 2020 2018 2019 2020 2018 2019 2020 ABC 202,790 210,685 223,096 205,024 222,891 246,574 -1.1%-5.5%-9.5%BOC 177,296 185,794 195,696 178,456 190,462 204,211 -0.7%-2.5%-4.2%CCB 255,635 266,404 278,332 258,346 278,951 304,162 -1.0%-4.5%-8.5%ICBC 298,316 311,888 326,437 301,717 325,888 356,329 -1.1%-4.3%-8.4%PSBC 54,526 58,257 65,445 55,347 63,409 73,824 -1.5%-8.1%-11.4%BoCom 71,355 75,308 79,133 72,351 76,401 81,875 -1.4%-1.4%-3.3%CMB 80,660 91,631 101,876 80,085 91,090 102,705 0.7%0.2%-1.1%CITIC 44,366 49,512 54,957 44,587 47,295 51,480 -0.5%4.7%6.8%CEB 31,879 34,185 36,363 32,679 34,845 37,221 -2.4%-1.9%-2.3%MSB 53,136 54,213 57,189 52,376 54,234 58,064 1.5%0.0%-1.5%PAB 24,199 26,426 29,412 24,565 26,951 30,659 -1.5%-1.9%-4.1%Sector 1,294,157 1,364,302 1,447,935 1,305,535 1,412,416 1,547,107 -0.9%-3.4%-6.4%Source:Company data,Credit Suisse estimates CompanyTickerRatingTPSpotUpsideMarcap(LC)(LC)%(US$bn)2018201920182019201820192018201920172018ICBC-H1398.HKO7.15.529%253.95.85.55.9%4.5%0.80.713.3%12.6%5.0 5.3 CCB-H0939.HKO8.66.434%206.85.55.36.0%4.2%0.70.713.6%12.9%5.2 5.5 ABC-H1288.HKO4.13.420%143.75.05.03.8%0.3%0.60.612.9%11.6%5.9 6.0 BOC-H3988.HKO4.53.434%128.04.94.77.0%4.8%0.60.510.7%10.4%6.0 6.4 BCOM-H3328.HKN6.26.12%58.05.55.25.7%5.5%0.60.510.1%9.9%5.2 5.5 CMB-H3968.HKO37.028.331%91.97.76.815.0%13.1%1.21.115.7%15.8%3.4 3.9 CITIC-H0998.HKO6.24.733%29.44.34.112.6%5.6%0.50.510.8%10.5%5.2 5.9 MSB-H1988.HKU4.45.4-19%25.53.93.87.8%2.0%0.50.412.8%11.6%1.9 1.3 CEB-H6818.HKN3.53.44%20.45.14.9-9.5%3.3%0.50.59.6%9.2%6.1 6.2 PSBC1658.HKN4.74.212%37.15.55.114.4%6.8%0.70.611.9%11.4%2.4 2.7 CompanyTickerRatingTPSpotUpsideMarcap(LC)(LC)%(US$bn)2018201920182019201820192018201920172018ICBC-A601398.SSO6.85.329%295.86.36.05.9%4.5%0.80.813.3%12.6%4.6 4.8 CCB-A601939.SSO8.06.426%250.46.26.06.0%4.2%0.80.813.6%12.9%4.6 4.8 ABC-A601288.SSN4.03.611%183.66.05.93.8%0.3%0.80.712.9%11.6%5.0 5.0 BOC-A601988.SSO4.63.628%166.05.95.77.0%4.8%0.70.610.7%10.4%4.9 5.3 BCOM-A601328.SSN6.35.98%68.56.15.85.7%5.5%0.70.610.1%9.9%4.7 5.0 CMB-A600036.SSO32.225.526%101.38.07.115.0%13.1%1.31.115.7%15.8%3.3 3.8 CITIC-A601998.SSN6.05.410%41.95.75.412.6%5.6%0.70.610.8%10.5%3.9 4.4 MSB-A600016.SSU4.85.8-17%33.24.84.77.8%2.0%0.60.512.8%11.6%1.6 1.0 CEB-A601818.SSN3.73.8-4%28.26.66.4-9.5%3.3%0.70.69.6%9.2%4.7 4.8 PAB000001.SZO13.29.835%26.46.96.38.4%9.2%0.70.710.4%10.3%1.4 1.4 PE(x)PE(x)EPS growthEPS growthDiv.yield(%)Div.yield(%)PB(x)PB(x)ROE(%)ROE(%)7 January 2019 China Banks Sector 5 Table of contents Focus charts 2 2019 Outlook:Striving for a fine balance 3 Slowing growth triggers more policy support.3 Lower profit growth estimates for the big banks.3 Sector valuation and stock calls.3 Valuation summary 4 Slowing growth triggers more policy support 7 Embrace for further macro slowdown in 2019.7 Policy started easing in mid-2018.11 Counting on more easing measures.13 Banks outperformed in 2018 after all.14 Better sentiment support but weaker profits in 2019.14 Lower profit growth estimates for the big banks 16 Maintain tight opex but not much room to improve cost-income ratio.21 Lower TPs of big banks to account for margin pressure and slower operating income growth.29 Increased preference for JSBs.29 Our picks among JSBs.30 Key risks.31 Appendix 32 Industrial&Commercial Bank of China(1398.HK/1398 HK)36 Focus charts and tables 37 China Construction Bank(0939.HK/939 HK)39 Focus charts and tables 40 Agricultural Bank of China(1288.HK/1288 HK)42 Focus charts and tables 43 Bank of China Ltd(3988.HK/3988 HK)45 Better positioned for 2019 45 Focus charts and tables 46 Bank of Communications(3328.HK/3328 HK)48 7 January 2019 China Banks Sector 6 Focus charts and tables 49 China Merchants Bank Co Ltd (3968.HK/3968 HK)51 Focus charts and tables 52 China Citic Bank(0998.HK/998 HK)54 Focus charts and tables 55 China Minsheng Banking Co Ltd (1988.HK/1988 HK)57 Focus charts and tables 58 China Everbright Bank(6818.HK/6818 HK)60 Focus charts and tables 61 Postal Savings Bank of China Co.,Ltd.(1658.HK/1658 HK)63 Focus charts and tables 64 Ping An Bank(000001.SZ/000001 CH)66 Focus charts and tables 67 7 January 2019 China Banks Sector 7 Slowing growth triggers more policy support In 2019,China banks will continue to be torn by slower economic growth but more policy support.We believe the policy backdrop will stay accommodative as the government strives to keep the system supported,which will provide sentiment support given the sector is also trading at near-trough valuation.Notably,in 2018,this policy and valuation support has helped China banks to outperform both MSCI China and the regional financial index by 10.3%and 4.2%.However,more policy support at this stage will continue to pressure market rate