Financial Report Observation | Bank of Nanjing: Double Increase in Net Operating Profit; Increase in Migration Rate of Concerned Loans

Recently, Bank of Nanjing disclosed the third quarter report of 2022. What is the quality of Bank of Nanjing? Are there potential risks? Let’s start with the financial statements and recent announcements

Net assets and their returns are on the rise

The third quarter financial report shows that from January to September this year, Total assets of Bank of Nanjing Reach the threshold of two trillion yuan, reaching 1.94 trillion yuan, an increase of 11.16%, Rankedamong 17 A-share listed rural commercial banks Fifth

In terms of operating capacity, in the first three quarters, the bank The operating revenue was 35.188 billion yuan, up 16.13% year on year; The net profit attributable to shareholders of the listed company was 14.971 billion yuan, with a year-on-year growth of 21.28%, Double digit growth

It is worth mentioning that in the face of the weakening of the overall economic environment in the first half of the year, insufficient credit demand, downward interest margin, and weak middle income, the performance of Bank of Nanjing still achieved a good expansion

In terms of net interest income, in the first three quarters of this year, Bank of Nanjing’s Net interest income exceeded 20 billion yuan, reaching 20.456 billion yuan. Only five listed city commercial banks have net interest income of more than 20 billion, Bank of Nanjing is one of them

As an important standard to measure the background of bank wealth management transformation, The scale of non interest income and its ratio to revenue also determine the strength of the bank’s intermediate income business

In terms of scale, Bank of Nanjing in the previous three quarters The non interest income of 14.733 billion yuan ranked among the top three listed city commercial banks, Second only to Bank of Ningbo (17.549 billion yuan) and Bank of Jiangsu (15.404 billion yuan); In terms of growth, Bank of Nanjing in the first three quarters The year-on-year growth rate of non interest net income was 48.74%, which was second only to Bank of Xiamen and ranked second to commercial banks in listed cities

From 2021, Bank of Nanjing Comprehensively promote the reform and transformation of Big Retail Strategy 2.0, Relying on the”big retail strategy” and taking financial assets as the main line, we will vigorously develop private businesses, balance the development of wealth management consignment and third-party consignment businesses, and improve the contribution of commission fees to retail consignment businesses Adhere to the strategy of big retail 2.0 and transaction banking, with good performance, excellent asset quality, high ROE and adequate provisions

ROE is Expected return on net assets, Expected return on net assets of listed companies The higher it is, the better the company’s profitability is, Investors are more likely to obtain expected returns when they buy the company’s shares

China Merchants Securities Research It was also pointed out that the ROE of Bank of Nanjing increased year on year, with the annualized weighted average ROE of 3Q22 being 16.69%, up 0.85 percentage points year on year, ROE is on the rising channel

Shareholders frequently increased their holdings during the year

When performance is improving, Shareholders of the Bank also frequently increased their holdings. Since the second half of the year, Jiangsu Traffic Control and its wholly-owned subsidiary Picea Capitalincreased its shareholding in Bank of Nanjing by about 350 million shares, and its total shareholding in the bank increased to 13.05%。 Nanjing Zijin Investment Groupincreased its shareholding ratio to 12.73%。 At the same time, The directors, supervisors and senior executives of the Bank also increased their shareholding in the Company to varying degrees.

During the reporting period, Bank of Nanjing RMB 20 billion of open-ended capital bonds were issued with a coupon rate of 3.32% The funds raised by this financial bond of Bank of Nanjing will be used to supplement tier one capital

Since this year, Bank of Nanjing The conversion rate of convertible bonds”Bank of South China Convertible Bonds” is significantly ahead of its peers. Among the top ten shareholders, 5 have increased their holdings through debt equity swap. Among them, the”Nanyin Convertible Bonds” held by BNP Paribas and Jiangsu Tobacco Company have all been converted into shares

Asset quality continues to improve, and the migration rate of concerned loans increases

In terms of asset quality, As of the end of September, the non-performing loan ratio of the bank was 0.90%, 0.01 percentage point lower than that at the end of last year Provision coverage rate 398.27%, 0.93 percentage points higher than the end of last year

It is worth noting that this line Migration rate of special interest loans Changes. The third quarter financial report showed that the migration rate of special interest loans at the end of the third quarter was 52.32%, It increased by 1.40 percentage points compared with the end of last year

The migration rate of special interest loans reflects The speed at which special loans deteriorate to subprime loans, Compared with the defective rate More forward-looking

On October 29, after the third quarter financial report was published, Announcement of Bank of Nanjing on the Reply of Shanghai Stock Exchange on the Supervision of Information Disclosure in the Bank’s Semi annual Report 2022 It mentioned the problem of”the migration rate of concerned loans increased year on year”

According to the announcement, in the first half of 2022, At the beginning of the year, the downward migration amount of special mention loans of the Bank was 4.937 billion yuan, an increase of 2.757 billion yuan over the same period of last year, leading to a year-on-year increase in the migration rate of special mention loans. There are three reasons:

First, Affected by the economic environment and epidemic situation, the risk quality of some customers has deteriorated, In accordance with the Guidelines on Loan Risk Classification and its risk classification methods, the Bank strengthened risk classification management, promptly removed the loans that met the criteria for non-performing loans to non-performing loans, and truly and dynamically reflected the loan quality

Second, Strengthened the disposal of non-performing loans, At the beginning of the year, special attention loans migrated downward and completed non-performing disposal of 3.142 billion yuan, accounting for 63.64% of the scale of downward migration. The amount and proportion of disposal were higher than that of the same period last year

Third, after the effective disposal of risk assets in the first half of the year, the bank Asset quality is further consolidated. It is expected that the downward migration scale of special interest loans in the second half of the year will be lower than that in the first half of the year.