中国放松但不安

1、ChinaEquitiesCommercial BanksChina BanksEasing but uneasy assessing scenariosTHIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINAWe discuss the easing measures to date and what further possible easing could mean for banksThree key impacts are on NIM, credit growth and banking rules; worst case, sus

2、tainable earnings can be hit by 27%Prefer CCB-H, BOC-H and ICBC-A, all Buy, for defensivenessChinas policymakers have introduced numerous easing measures on the back of COVID-19; further easing is also expected, such as RRR cuts, LPR cuts, and deposit rate cuts. We identify three key sector implicat

3、ions on the back of this easing.#1 NIM to decline in 2020e, with or without deposit rate cut Lowering rates is generally negative for banks NIM. Loan mix adjustments may pressure NIM due to de-risking and the CBIRCs guidance to lower lending rates. Together, we expect the loan-to-deposit spread to n

4、arrow in 2020e, leading to a decline of NIM. Within our coverage, we estimate a c16-27% earnings or a c15-30% fair value impact on individual banks under our central scenario (60bp loan yield decline, 30bp time deposit rate decline, and 150bp RRR cut). The impact on individual banks differs signific

5、antly. Banks with a lower cost-to-income ratio and a higher mortgage loan mix (e.g. CCB and ICBC) are expected to be less impacted.#2 Credit growth: organic growth capability is only 7-9% for the sector From a sector level, China banks can theoretically attain organic risk-weighted asset growth of c

6、7-9% y-o-y (given the sector ROE of 10.96% in 2019, likely ROE pressure in 2020e, and the typical payout ratio of c15-30%). Despite policy stimulus, capital will remain a key constraint for the sector to sustain a 12.3% RMB loan growth, as in 2019. Banks may need to raise new capital, accept a lower

7、 capital ratio, or shift growth drivers to lower risk-weight segments. Listed state-owned and joint-stock banks are generally in a better position with organic growth capability of 10-14%, but challenges lie on certain weaker joint-stock, city and rural commercial banks.#3 Relaxation of banking rule

8、s can be a secret sauce; use it with care Initiatives may include relaxing or delaying new WMP rules, offering flexibility to restructure NPLs, enabling certain non-bank financing activities, lowering capital ratio requirements, or lowering the risk weight on credit assets. We believe a combination

9、of monetary and regulatory easing could be deployed to help buffer the near-term shock from COVID-19; longer term, we would also expect regulators to dial back some of the easing measures to avoid a structural deterioration of balance sheet quality.Investment implications Maintain CCB-H, BOC-H and I

10、CBC-A, all rated Buy, as our preferred banks (see if youre bearish, consider these, 24 January 2020; Potential near/mid/long-term impact from viral outbreak, 5 February 2020). Easing policies may benefit joint-stock banks more than state-owned banks, but the pace and magnitude of further easing rema

11、in uncertain. Joint-stock banks are also exposed to a higher level credit risks and investment risks, in our view.Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.17 March

12、2020Gary Lam*Head of Greater China Banks ResearchThe Hongkong and Shanghai Banking Corporation Limited HYPERLINK mailto:gary.lam.hk gary.lam.hk+852 2996 6926Yiwei Liu*Research Associate, China BanksThe Hongkong and Shanghai Banking Corporation Limited HYPERLINK mailto:yi.wei.liu.hk yi.wei.liu.hk+852

13、 2996 6635Ophelia Cheng* Associate GuangzhouEmployed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/ qualified pursuant to FINRA regulations Asiamoney Global RMB Poll 2020Voting opens 2nd 27th March 2020If you value our service and insight, please voteClick here to voteIss

14、uer of report: The Hongkong and Shanghai Banking Corporation LimitedView HSBC Global Research at:https: HYPERLINK / /Contents HYPERLINK l _TOC_250014 #1 NIM: decline in 2020e regardless of deposit rate cut 3 HYPERLINK l _TOC_250013 #1.1 Sensitivity to LPR, investment, deposit rate and RRR cuts 6 HYP

15、ERLINK l _TOC_250012 #1.2 Scenario analysis of interest rate cut impact on China banks 7 HYPERLINK l _TOC_250011 #1.3 Identifying winners/laggards under the current rate dynamics 9 HYPERLINK l _TOC_250010 #1.4 Fair value impact analysis 12 HYPERLINK l _TOC_250009 #2 Credit growth: organic growth rat

16、e should only be 7-9% 14#3 Relaxation of banking rulescan be a secret sauce 16 HYPERLINK l _TOC_250008 #4 Summary of key counter- cyclical measures 19 HYPERLINK l _TOC_250007 Valuation comp 21 HYPERLINK l _TOC_250006 China banks share performance 22 HYPERLINK l _TOC_250005 China banks A-H premium 23

17、 HYPERLINK l _TOC_250004 Regional banks valuation comparison 23Appendix I PBoC monetary statistics (loans, deposits andTSF growth) 24 HYPERLINK l _TOC_250003 Appendix II CBIRC statistics on banking operations 25Appendix III Past rate movements 26 Appendix IV China banksfinancial summary 27 HYPERLINK

18、 l _TOC_250002 Valuation and risks 29 HYPERLINK l _TOC_250001 Disclosure appendix 30 HYPERLINK l _TOC_250000 Disclaimer 33#1 NIM: decline in 2020e regardless of deposit rate cutContrary to some market expectations, we believe NIM will decline in 2020e regardless of the timing and magnitude of any de

19、posit rate cuts. More aggressive deposit rate and RRR cuts would likely come along with a more aggressive lending rate decline.NIM trends after the 2014-16 rate cut cycleA low-rate environment is generally negative for banks NIM. The experience in the 2014-16 cycle suggests that a 165bp cut in the 1

20、-year PBoC benchmark lending rate and a corresponding 150bp cut in the 1-year PBoC benchmark deposit rate cut result in a 61bp compression in NIM.Exhibit 1: Low-rate environment is generally negative for banks NIMQuarterly sector NIM3.0 % Over all loan yield (RHS)%2.22.0Quarterly

21、average benchmark lending rate 1-year (RHS) Quarterly average benchmark deposit rate 1-year (RHS)87654321Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q151Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q184Q181Q192Q193Q194Q191Source: Company data, HSBCNote: Assume a constant d

22、ividend payout of 30%, number based on our top 10 covered China banks.NIM and rate trends in 2H19 before the CONVID-19 impactEven before considering the impact of COVID-19, LPR reform from August 2019 onwards put pressure on banks NIM. LPR 1yr and 5yr are now 30bp and 15bp lower than the correspondi

23、ng PBoC benchmark lending rate, respectively. Partly as a result the early LPR reform, CMB and PABs NIM was down 12bp q-o-q and 9bp q-o-q in 3Q19, respectively, partly reflecting the impact of negative loan re-pricing (China Banks 3Q19 results wrap: diverging performances, 4 November 2019).Exhibit 2

24、: Loan Prime Rate (LPR) versus PBoC benchmark interest rate% 5.04.24.03.8Jan-18 Feb-18 Mar-18Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19Feb-19 Mar-19 Apr-19 May-19Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20Mar-203.6Benchmark lending rate 1-yearBe

25、nchmark lending rate above 5-yearLPR 1-yearLPR 5-year4.904.754.354.05Source: Wind, HSBCSimilarly, even before the PBoC triggered any adjustment in benchmark deposit rates, the more accommodative liquidity stance had driven money market rates lower. DR007 is down 49bp YTD to 2.16% as at 12 March 2020

26、 (40bp lower than the 2H19 average), and SHIBOR 1-month is down 85bp YTD to 2.13% (59bp lower than the 2H19 average).Exhibit 3: China market rates market rate declined in February 20205.0%SHIBOR 1mthBenchmark lending rate 1 yearMLF rate 1 yearDR007 10-day moving average4.54.03.53.02.5Jan-16Apr-16Jul

27、-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-202.0Source: Wind, HSBC2020 onwards and further easingHeading further into 2020, policymakers have introduced numerous counter-cyclical policies; the market is further expecting a continuation of LPR declines and in

28、creased expectations of RRR cuts and deposit rate cuts (see a summary on page 18 for a list of counter-cyclical policies). In brief, key monetary measures introduced so far include these key aspects: (i) ensuring the availability of contingent credit, especially for POEs and SMEs; this includes a RM

29、B300bn central bank lending quota for supporting enterprises related to epidemic control, and a RMB500bn central bank lending/discounting quota for supporting the resumption of work, especially for SMEs; (ii) window guidance to lower the effective lending rate to reduce the burden of COVID-19 affect

30、ed borrowers; and (iii) added flexibility to restructure loans and extend repayment periods of interest and principal.The decision to trigger a PBoC benchmark rate cut is a hard one for the PBoC, in our view. Deposit rate cuts may risk disrupting the gradual rate reform process via the introduction

31、of LPR and the phase-out of the PBoC benchmark lending rate. Policymakers will also need to avoid the unintended consequences from a deposit rate cut, such as: (i) weakening deposits as an asset class and discouraging deposit growth; (ii) introducing competition for deposits versus alternative produ

32、cts, such as WMPs and structured deposits; and (iii) introducing added volatility on broader FX and rates.Exhibit 4: The PBoCs RRR requirements for large- and medium/small-sized depository institutionsliquidityliquidity*c.RMB700bn wasused to paydown MLFc.RMB450bn wasused to paydown MLFliquidityRMB90

33、0bn was usedto paydown MLFEstimated to release c.RMB800bnEstimated to release c.RMB900bnEstimated to release c.RMB1.5trn liqiudityEstimated to release c.RMB1.2trn liqiudityEstimated to release c.RMB500bnEstimated to release c.RMB1.3trn liquidity;22 %Mid-small sized depository financial institutionsL

34、arge depository financial institutions201816141212.50Jan-18 Feb-18 Mar-18Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19Feb-19 Mar-19 Apr-19 May-19Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19Jan-201010.50Source: PBoC, HSBC. *Amount of liquidity released includes impact of t

35、argeted RRR cuts delivered on 15 October 2019 and 15 November 2019.Note: The targeted RRR cut of 50-150bp for banks with certain proportion of inclusive loan mix in new loans and outstanding loans is not reflected in the chart.On loans, we remain cautious on yield and effective demand as banks proac

36、tively de-risk their portfolios and the CBIRC continues to guide banks to lower lending rates to support borrowers who are impacted by the COVID-19 outbreak.We expect policy stimulus to offer more support towards corporate loans but less towards retail consumption-related loans. We compare banks loa

37、n growth in Exhibit 6; INDB, PSB, CEB, PAB and SPDB were the faster growing banks, of which, PAB, CEB and SPDB had more of their growth driven by retail non-mortgage loans.Exhibit 5: China banks sensitivity to retail non-mortgage loans (i.e. credit card and other consumer loans)Credit card Other con

38、sPPOPPBTCredit cards & other cons. loans% total loans% total assetsAssuming 1% loss on credit card and other cons. loans% PPOP% PBT Reported ROE Stressed ROERMBm(1H19a)(1H19a)(2020e)(2020e)(1H19a)(1H19a)impactimpact(2020e)(2020e)PAB510,958525,95296,87039,44649.8%28.9%-10.7%-26.3%11.5%8.5%PSB109,0498

39、73,695127,15368,07620.9%9.8%-7.7%-14.4%12.3%10.6%CEB429,093281,093100,22049,67227.4%15.3%-7.1%-14.3%11.2%9.6%CITIC500,204413,480139,07564,49523.8%14.3%-6.6%-14.2%10.6%9.1%MSB417,040522,779122,62866,92329.5%14.8%-7.7%-14.0%11.4%9.8%SPDB439,645495,724153,56075,43925.2%14.0%-6.1%-12.4%11.8%10.3%CMB652,

40、635550,813187,331126,18327.8%16.7%-6.4%-9.5%15.2%13.8%INDB306,738166,764142,67278,21214.6%6.8%-3.3%-6.1%12.8%12.1%ABC454,675723,876453,240281,3209.1%4.9%-2.6%-4.2%12.4%11.8%BOC457,676540,872382,618260,4598.0%4.5%-2.6%-3.8%11.2%10.8%CCB*672,148405,274516,494340,2288.0%4.4%-2.1%-3.2%12.6%12.2%ICBC628,

41、173494,751610,635409,1806.9%3.7%-1.8%-2.7%12.3%12.0%Source: Company data, HSBC estimates. *Domestic loan breakdown.Exhibit 6: China banks loan growth (upper: 2016-1H19 CAGR, lower: growth contribution)19.619.515.814.812.69.28.825 %202016-1H19 CAGR - loan growth151050INDBPSBCEBP

42、ABSPDBABCCITICCMBMSBBOCBoComICBCCCB%17.013.213.827.221.939.228.928.953.842.131.443.720.510.642.340.318.07.195.944.512.040.736.89.011.20.941.635.743.719.39.045.845.947.345.254.953.77.8-20.7 14.4 -12.2 -18.752.1120Corporate loansDiscounted billsRetail non-mortgage loansMortgage10

43、0806040200-20INDBPSBCEBPABSPDBABCCITICCMBMSBBOCBoComICBCCCBSource: Company data, HSBC#1.1 Sensitivity to LPR, investment, deposit rate and RRR cutsIn this section, we illustrate the sensitivity of banks earnings to LPR cuts, benchmark deposit rate cuts, and declining investment yield (Exhibit 7). Th

44、e analysis is applied to our coverage universe of 13 listed state-owned and joint-stock banks.According to our estimates, every 10bp loan yield decline could reduce our covered banks NIM by 3-6bp or earnings by 3.0-4.9%, every 10bp investment yield decline could reduce NIM by 1- 2bp or earnings by 1

45、.0-1.7%, while every 10bp deposit rate cut could increase NIM by 2-4bp or earnings by 2.0-3.4%. We offer a range of impact cases (assuming 100%, 80% and 60% of the banks balance sheets are impacted) due to the known limitations discussed below.Exhibit 7: Interest rate sensitivity analysis on HSBC-co

46、vered bank aggregateBear case Central caseBull case Remarks Item RMBm, unless stated100% impact 80% impact 60% impactAIEA147,616,436Coverage aggregate, 1H19Net interest income3,136,318Coverage aggregate, annualised 1H19Asset yield4.05%Coverage aggregate, 1H19NIM2.12%Coverage aggregate, annualised 1H

47、19PBT1,727,902Coverage aggregate, 2018Loan yield decline of 10bpAverage loans85,090,619Coverage aggregate, 1H19Effective rate impact -0.10% -0.08% -0.06% Assuming 100%, 80% and 60% impact hNet interest income impact-85,091-68,072-51,054 item f x item gNIM impact-0.06%-0.05%-0.03% item h / item aPBT

48、impact-4.92%-3.94%-2.95% item h / item eInvestment yield decline of 10bpAvg. investment (net off own debt)29,490,260Coverage aggregate, 1H19Effective rate impact -0.10% -0.08% -0.06% Assuming 100%, 80% and 60% impact m Net interest income impact-29,490-23,592-17,694 item k x item lnNIM impact-0.02%-

49、0.02%-0.01% item m / item aoPBT impact-1.71%-1.37%-1.02% item m / item eDeposit cost decline of 10bpAverage deposits108,876,485Coverage aggregate, 1H19Demand deposit mix46.6%Assuming no impact to demand deposits rEffective rate impact-0.10%-0.08%-0.06% Assuming 100%, 80% and 60% impact sNet interest

50、 income impact 58,165 46,532 34,899 item p x (1 - item q) x item rNIM impact0.04%0.03%0.02% item s / item aPBT impact3.37%2.69%2.02% item s / item eRRR cut of 50bpAverage additional liquidity amount544,382Item p x 50bpEffective yield uplift2.43%Item c - 1.62% (interest rate for RRR)Net interest inco

51、me impact13,221item v x item wNIM impact0.01%item x / item aPBT impact0.77%item x / item eSource: Company data, HSBC estimatesNote: Coverage aggregate includes our 13 covered China banks.Known limitations of the sensitivity analysisIgnores secondary effect on the economy and asset prices a lower rat

52、e may stimulate loan demand, support asset prices and reduce credit lossesIgnores deposit migration a lower rate historically results in a rise of the CASA deposit mix across time; an improved deposit mix may help banks to lower funding costsIgnores the differing rate dynamics of different currencie

53、s China banks overseas and non-RMB assets could face a different magnitude of rate change impact (see Exhibit 16)Ignores the effect on fixed-rate loans certain types of loans, including consumption loans and fixed-rate corporate loans could be immune to declining ratesIgnores the effect on costs ban

54、ks may cut costs on the back of reduced revenue#1.2 Scenario analysis of interest rate cut impact on China banksWe expand the above sensitivity analysis to three scenarios to gauge the potential aggregate impact.Our first scenario overlays our economists base case forecasts of a 60bp y-o-y LPR cut i

55、n 2020e, a 30bp y-o-y time deposit rate cut, and a 150bp y-o-y RRR cut on our sensitivity analysis. In this case, we would expect banks to face an 11-20bp NIM decline, and a 9.4-17.2% yearly profit impact after the relevant assets and liabilities are fully re-priced over time.Exhibit 8: HSBC economi

56、sts base case forecasts for interest rate and RRR cutsPeriod end, %2019Spot2020ey-o-y changeLPR 1-year4.154.053.55-0.60pptMLF 1-year5-0.30pptBenchmark deposit rate 1-year1.501.501.20-0.30pptRRR for large-sized depository financial institutions13.0012.5011.50-1.50pptRRR for small- and medi

57、um-sized depository financial institutions11.0010.509.50-1.50pptSource: Wind, HSBC estimatesExhibit 9: Scenario 1 loan yield, deposit cost and RRR down 60bp, 30bp and 150bpItemRMBm, unless statedBear case 100% impactCentral case 80% impactBull case60% impact RemarksaLoan yield decline 60bp NIM impac

58、t-0.35%-0.28%-0.21% Impact on 1H19 NIMbPBT impact-29.55%-23.64%-17.73% Impact on 2018 PBTcDeposit cost decline 30bp NIM impact0.12%0.09%0.07% Impact on 1H19 NIMdPBT impact10.10%8.08%6.06% Impact ton 2018 PBTeRRR cut of 150bp NIM impact0.03%Impact on 1H19 NIMfPBT impact2.30%Impact on 2018 PBTgTotal N

59、IM impact-0.20%-0.16%-0.11% item a + item c + item ehTotal PBT impact-17.15%-13.26%-9.37% item b + item d + item fSource: HSBC estimatesIn our second scenario, we assume that the magnitude of the PBoC benchmark time deposit rate cut will replicate the LPR cut (i.e. both being cut by 60bp), while the

60、 RRR is being cut by 150bp. The aggregated NIM and PBT impact here would be significantly milder, down 4-8bp and down 3.3-7.1%, respectively.Exhibit 10: Scenario 2 loan yield, deposit cost and RRR down 60bp, 60bp and 150bpBear case Central caseBull caseItem RMBm, unless stated100% impact 80% impact