Bank of Beijing (601169): Increase risk resolution
The 2Q19 results were in line with our expectations. Bank of Beijing disclosed 1H19 results, with revenue of 32.7 billion US dollars, an increase of 19.
The profit before provision was 26.4 billion yuan, a year-on-year increase of 25.
2%, net profit attributable to mother is 1.29 million yuan, an increase of 8 year-on-year.
6%, of which, 2Q single quarter revenue exceeded growth rate of 15.
5%, the ten-year growth rate of net profit attributable to mothers.
The increase in banks’ non-performing disposals and provisions resulted in a difference between the growth rate of PPOP and net profit.
The overall performance was in line with expectations.
The higher 南宁桑拿 PPOP growth rate with higher development trend comes from higher revenue growth rate and cash-to-income ratio: 1) The average balance net interest margin at the beginning and end of 2Q191.
87%, an increase of 5 / 8bp per year / mo.
We expect the sequential increase to be mainly due to the increase in loans to high-yield customers.
Net interest income in the second quarter of 19 increased by 12 per year.
2) The scale expansion is stable.
In 1H19, total assets / loans / deposits increased by 1 quarter-on-quarter.
8% / 1.
3) 1H19 net budget fee income increased by 5.
The 5% drag was mainly due to the guarantee and commitment business.
4) Cost-to-income ratio is higher than expected in the industry.
1H19 business and management fees increased by only 1% every six months; cost income in the first half of the year18.
3%, a decline of 3 per year.
Increasing the speed of risk resolution, the number of bad write-offs and provisions has increased significantly over the past few years.
The defective rate increased by 5bp to 1 from the previous quarter.
45%, after adding back write-offs, the net bad generation rate in 2Q19 increased by more than 44bp to 1.
Compared with the benchmark at the end of 2018, the proportion of overdue loans rose by 4bp to 2.
01%, the ratio of non-performing / overdue loans over 90 days rose 19ppt to 127% month-on-month.
The proportion of attention-oriented loans rose 13bp to 1 from the previous quarter.
Provision coverage decreased by 1 from the previous month.
6ppt to 212.
Signed a joint venture bank contract with ING.
In March 2019, Bank of Beijing announced that the board of directors agreed to jointly invest 3 billion yuan with ING Bank to initiate the establishment of a Sino-foreign joint venture bank.
Strengthen capital management.In the case of no external financing, the core tier 1 capital adequacy ratio increased by 0 from the previous month.
05ppt to 9.
Annualized ROAE (disclosed value) decreases by 0 every year.
12ppt to 13.
Earnings forecasts and estimates Bank of Beijing is currently trading at zero.
58x 2019e P / B.
Keep the profit forecast unchanged, corresponding to the growth rate of net profit in 20194.
Taking into account the pressure on bank asset quality, the target price is lowered9.
4% to 6.
08 yuan, corresponding to 0.
68x 2019e P / B and 16.
4% growth space.
Maintain Neutral rating.
The quality of risk assets was lower than expected.