"Investor Network" Mu Jun

Edit soup towels

A few days ago, 42 A-share listed banks have released their third quarterly reports for 2022, and the asset quality of most banks has improved.

However, Qingdao Rural Commercial Bank Co., Ltd. (hereinafter referred to as "Youth Agricultural Commercial Bank", 002958.SZ), the agricultural commercial bank with the smallest assets, has the highest non-performing loan ratio, reaching 1.91% at the end of the third quarter.

In terms of performance, in the first three quarters, the bank achieved operating income of 8.021 billion yuan, down 4.88% from the same period last year; the net profit belonging to the shareholders of the parent company was 2.799 billion yuan, an increase of 2.42% over the same period last year. In the third quarter, the operating income reached 2.687 billion yuan in a single quarter, down 8.24% from the same period last year.

Revenue continued to decline in the first three quarters

Compared with the reporting period, the operating income of Qingnong Commercial Bank continued to decline in the first three quarters, and the rate of decline was expanded, while the growth rate of homed net profit further narrowed.

In the first half of 2022, the bank's operating income fell 3.09 per cent year-on-year, while net profit rose 5.08 per cent, compared with 4.88 per cent year-on-year and 2.42 per cent in the first three quarters.

Through the semi-annual report, we can see the changes of specific items in revenue. In the first half of the year, the interest income of Youth Farmers' Commercial Bank reached 8.294 billion yuan, an increase of 0.76%, only a slight increase. Interest income from loans and advances is the largest component of the bank's interest income. In the first half of the year, the bank's interest income from loans and advances was 5.927 billion yuan, accounting for 71.47% of the total interest income, a decrease of 134 million yuan, or 2.21%, compared with the same period last year. The reason is that in the current environment of tax cuts and profits, financing costs continue to decline, and the average rate of return on bank loans as a whole is also in a downward trend.

In fact, the force driving the slight increase in its interest income is the growth of financial investment, buying and selling financial assets and lending funds.

Distribution of average balance of loans and advances, interest income and average rate of return of Youth Agricultural Bank

It is worth noting that while the return on assets of the bank is falling, the debt cost ratio is on the rise, and the range is large.

In the first half of the year, the interest expense of the Youth Agriculture Bank was 4.429 billion yuan, an increase of 6.65% over the same period last year. The interest expense of absorbing deposits is the largest component of the bank's interest expenditure, accounting for 2.796 billion yuan, accounting for 63.13% of the total interest expenditure, an increase of 355 million yuan, or 14.54%, over the same period last year.

This data also implies that it is not easy for the bank to collect deposits, and deposit interest expenses have increased by more than 10%. On the one hand, there is an increase in scale, and on the other hand, the bank said, "it is mainly due to the increase in the proportion of time deposits while the scale of deposits absorbed by the bank has increased." The cost rate of time deposits is much higher than that of demand deposits, and is still rising compared with the same period last year. In particular, the average cost rate of individual time deposits has exceeded 3%, reaching 3.02%.

Distribution of average Deposit balance, interest income and average rate of return in Youth and Agricultural Banks

Because the increase in interest expenses was much higher than that in interest income, the bank's net interest income fell 5.25% in the first half of the year compared with the same period last year.

If you want to improve profitability, saving expenditure costs is an important means. In the first half of the year, the business and management fees of Qingnong Commercial Bank failed to be reduced, while the loss of credit impairment became the main force to pull down the cost, falling 6.48% in the first half of the year compared with the same period last year. Its effect is directly reflected in reducing the decline space of operating profits, and finally, under the combined effect of the reduction of income tax expenses, achieve net profit growth.

It is worth mentioning that the decline in credit impairment losses of Youth Agricultural Commercial Bank is due to the reduction of other types of credit provisions, but does not reduce the credit impairment losses of loans and advances. In the first half of the year, the credit impairment losses of loans and advances of the bank were 2.106 billion yuan, an increase of 220 million yuan over the same period last year.

The defect rate rose to 1.91%.

The provision coverage rate of Qingnong Commercial Bank is not very high, at 220.03% as of the end of June, but the bank has further increased the provision of loans and advances, which is rooted in the heavy pressure on asset quality.

The non-performing rate at the end of June was 1.72%, down from the beginning of the year, according to the semi-annual report, due to the disposal of a batch of non-performing loans in the first half of the year, although the balance of non-performing loans still increased.

By the end of the third quarter, the bank's defect rate further rose to 1.91%, up 0.17 percentage points from the beginning of the year, and became the highest among A-share listed banks.

Given the risk of loan quality, it is understandable that the bank continues to increase its loan provision. Since the beginning of this year, the bank's provisions have also been consumed. Data show that the provision coverage rates at the end of last year, the end of June and the end of September this year were 231.77%, 220.03% and 215.89%, respectively, which continued to decline.

At the same time, the problem of real estate loans, which is more concerned by the outside world, has been alleviated. The balance of real estate loans decreased slightly from the beginning of the year, while the balance of personal housing loans did not change much, so the proportion of real estate loans decreased. The bad rate of the bank's real estate loans also fell to 1.8% in the first half of the year, down from 3.44% at the end of last year.

However, the bank's real estate industry and related construction industry still have a large proportion of loans, ranking second and fourth respectively, with three seats in the bank's top ten loan customers belonging to the real estate industry and the construction industry.

The Distribution of loans in different Industries of Youth Agricultural Commercial Bank

Also causing market concern is that the bank's customer loan concentration is on the high side. At the end of June, the bank's single group customer credit concentration was 10.7%, and the largest ten single customer loans accounted for 42.59%, all of which were not far from the regulatory red line.

The chairman of the board of directors of the extended "service" resigned.

The bank's senior management team has also changed this year, and on August 10, Qingnong Commercial Bank announced that it had received a report of the resignation of Chairman Liu Zhongsheng. Different from the common phrases such as "personal reasons" and "another appointment" in the past, Liu Zhongsheng resigned because he exceeded the relevant regulations on the tenure of key personnel.

According to the data, Qingnong Commercial Bank is a joint-stock rural commercial bank formed by a newly established merger on the basis of nine rural cooperative financial institutions in June 2012 and listed on the Shenzhen Stock Exchange in March 2019.

From January 2011 to June 2012, Liu Zhongsheng worked in Qingdao Rural Credit Union as party committee secretary and chairman. Since June 2012, he has been the party committee secretary and chairman of Qingnong Commercial Bank for more than 10 years.

In fact, Liu Zhongsheng is not the only one in the bank's executive team who has been in a position for 10 years. President Liu Zongbo, Vice President Jia Chenggang, Ding Minglai, Wang Jianhua and Supervisor Liu Xinggang all have more than 10 years. Sui Gongxin served as the office director during the period of Qingdao Rural Credit Cooperative. after the establishment of Qingdao Agricultural and Commercial Bank, he served as office director, secretary to the board of directors, and also served as general manager of the Strategic Development Department after 2016. Among them, only Vice President Li Chunlei took office in August 2016 after less than 10 years in office.

After Liu Zhongsheng leaves office, the market is waiting to see who will become the new chairman of Qingnong Commercial Bank and what changes it will bring to the bank. (produced by thinking Finance) ■