Agricultural Bank (601288) semi-annual report comment: the cost of debt has increased, asset quality remains stable

Agricultural Bank (601288) semi-annual report 无锡夜网 comment: the cost of debt has increased, asset quality remains stable

Event: On August 31, 2019, Agricultural Bank of China announced its 2019 interim results. Investment highlights: profit growth before provisioning increased by 5.

43%, with expected risk assets growing by 11 per year.

76%: Operating income in the first half of 2019 will increase by 5 per year.

51%, realizing an annual increase in profits before provisioning of 5.

43%, net profit attributable to mothers increased by 4 per year.

88%.

The balance of deposits increased by 6.

82%, loan budget increased by 8 compared with the beginning of the year.

8%, with an expected annual increase in risk assets of 11.

76%.

The financial report data shows that the comprehensive net interest margin in the first half of the year decreased by 17BP from the beginning: the initial narrowing of the net interest margin was that the interest rate on deposits on the debt side increased significantly from the beginning, with an increase of 21BP.

The asset-side loan interest rate only increased slightly by 2BP.

The main contribution of new loans came from the business of corporate loans: from the perspective of the structure of new credit, the ratio of new corporate and retail loans was 54.

2% and 42.

2%, the new bill accounted for 3.

6%.

The increase in public loans was mainly contributed by transportation, warehousing and postal services, and leasing and business services; the increase in retail loans was mainly concentrated in personal housing loans, accounting for more than 60% of the new retail loans.

In the first half of the year, net fee income increased by 16 per year.

6%: The revenue of each sub-item increased from the same period last year.

Specifically, the three businesses of electronic banking, consulting and consulting, and bank card fees contributed the most to revenue, accounting for 86% of supplementary fee income.

Non-performing loan ratio decreased by 16BP from the beginning: Non-performing loan ratio decreased by 16BP from the beginning. Concerned loans accounted for a decrease of 31BP from the beginning of the year, and asset quality improved significantly.

Looking at the changes in the non-performing structure of various types of loans, the non-performing ratios of corporate loans and 南京夜网论坛 retail loans both declined.

However, attention must be paid to the increase in non-performing loans in transportation, warehousing and postal services, leasing and business services, and the real estate industry, which account for a relatively high proportion of public debt.

Profit forecast and investment recommendations: The company’s overall operation will be stable in the first half of the year, the decline in net interest margin will be relatively transparent, and the overall asset quality will remain stable.

The company currently expects the corresponding 2019-2020 PB estimate to be zero.

68 times, 0.

62 times, maintaining the “overweight” rating.

Risk factors: The economic recession is better than expected; the market decline presents systemic risks.