股 票 研 [Table_Title] Richard Cao 曹柱 Company Report: China CITIC BANK (00998 HK) 究 (86755) 2397 6870 Equity Research 公司报告： 中信银行 (00998 HK) [email protected] 20 November 2020 CITIC[Table_S ummaryWealth] Management Open for Business, Maintain "Accumulate" 信银理财开业，维持“收集” 公 The Company’s shareholders’ net profit was RMB36,918 mn, down 9.4% 司 Rating:[Table_Rank] YoY in 1-3Q20. In 1-3Q20, net interest income was RMB99,058 mn, up 5.2% Accumulate Maintained 报 YoY. Non-interest income increased by 4.8% to RMB50,449 mn. The Company’s NPL ratio was 1.98% as at the end of 3Q20, up 0.15 ppts 告 评级： 收集 (维持) Company Report compared with the end of 1H20, or up 0.33 ppts compared with the end of 2019. In 1-3Q20, the Company’s impairment losses increased by 25.1% YoY. NPL coverage ratio decreased by 5.17 ppts compared with the end of 2019 to 6[Table_Price]-18m TP 目标价 : HK$4.32 170.08%. Revised from 原目标价: HK$4.32 In June 2020, the commencement of business of the wholly-owned subsidiary Share price 股价: HK$3.330 告 of the Company, CITIC Wealth Management, was approved by regulators. 证 CITIC Wealth Management was formally established and open for business 报 Stock performance in July 2020. We expect that the commencement of CITIC Wealth 券 股价表现 究 Management will contribute to the Company's transformation of asset 研 management business, and will benefit the Company's healthy [Table_QuotePic] 10.0 % of return 研 development of the asset management business in the near future. 究 5.0 0.0 券 In the rest of 2020, as we expect the Company's NPL ratio to continue to 报 (5.0) increase to a certain extent, we project the Company’s impairment losses to (10.0) 证 告 remain at a high level, which is expected to impact its earnings negatively to a (15.0) Equity Research Report certain extent. We revise down EPS estimates for FY20/ FY21/ FY22 by (20.0) (25.0) 14.2%/ 14.1%/ 14.3%, respectively. We expect EPS for FY20/ FY21/ FY22 to (30.0) grow YoY by -8.8%/ 7.9%/ 8.8% to RMB0.870/ RMB0.939/ RMB1.021, (35.0) [Tab respectively. We maintain our "Accumulate" rating and our TP of HK$4.32 (40.0) for the Company, equivalent to 4.3x FY20 PER, 4.0x FY21 PER, 3.6x FY22 Nov-19 Feb-20 May-20 Aug-20 Nov-20 le_I HSI CITIC BANK PER, 0.4x FY20 PBR, 0.4x FY21 PBR and 0.3x FY22 PBR. nfo1 公司 2020 年前三季度股东净利润达 36,918 百万元人民币，同比下降 9.4%。2020 年前三 ] 季度，净利息收入达 99,058 百万元人民币，同比增长 5.2%。非利息收入同比增长 4.8% Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 至 百万元人民币。 年第三季度末，公司不良贷款率为 ，比 年上 银 50,449 2020 1.98% 2020 股价变动 1 个月 3 个月 1 年 行 半年末增加 0.15 个百分点，比 2019 年末增加 0.33 个百分点。2020 年前三季度，公司减 Abs. % 绝对变动 (0.6) (3.2) (26.7) 值损失同比增长 25.1%。不良贷款拨备覆盖率比 2019 年末下降 5.17 个百分点至 170.08%。 % 行 Rel. % to HS Index (8.0) (7.9) (23.9) 相对恒指变动 % 2020 年 6 月，监管机构已批准公司全资子公司信银理财开业。2020 年 7 月，信银理财已 业 Avg. Share price(HK$) 3.3 3.2 3.7 正式成立并开业。我们预计信银理财开业将有助于公司资管业务转型，未来一段时间将有 平均股价（港元） Banking Sector 利于公司资管业务健康发展。 Source: Bloomberg, Guotai Junan International. 2020 年余下时间，由于我们预计公司的不良贷款率将继续一定程度上增长，我们预计公司 的资产减值损失预计仍将维持在较高水平，预计将会一定程度上负面影响其盈利。我们分 别将 2020/2021/2022 财年的每股盈利预测下调 14.2%、14.1%和 14.3%。我们预计 2020/2021/2022 财年的每股盈利分别为 0.870 元人民币、0.939 元人民币和 1.021 元人民 币，分别同比上涨-8.8%、7.9%和 8.8%。我们维持我们对公司的“收集”投资评级及 4.32 [Tab 港元的目标价，对应 4.3 倍 2020 财年市盈率、4.0 倍 2021 财年市盈率和 3.6 倍 2022 财 le_I 年市盈率，0.4 倍 2020 财年市净率、0.4 倍 2021 财年市净率和 0.3 倍 2020 财年市净率。 Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE nfo2 年结Profit] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率 ] 12/31 (RMB m) (RMB m) (RMB) (△%) (x) (RMB) (x) (RMB) (%) (%) 中 2018A 165,766 44,513 0.882 4.7 3.3 8.209 0.4 0.230 7.9 11.3 2019A 187,881 48,015 0.954 8.1 3.1 8.976 0.3 0.239 8.0 11.1 信 2020F 197,604 43,884 0.870 (8.8) 3.3 9.627 0.3 0.218 7.6 9.3 银 2021F 215,147 47,256 0.939 7.9 3.1 10.330 0.3 0.235 8.2 9.4 行 2022F 236,939 51,284 1.021 8.8 2.8 11.096 0.3 0.255 8.9 9.5 [Table_BaseData]Shares in issue (m) 总股数 (m) 48,934.8 Major shareholder 大股东 CITIC Group 66.0% Market cap. (HK$ m) 市值 (HK$ m) 162,952.9 Free float (%) 自由流通比率 (%) 34.0 3 month average vol. 3 个月平均成交股数 (‘000) 43,893.7 FY20 CET-1 Ratio (%) FY20 一级资本比率(%) 8.7 China (00998 CITIC HK) BANK 52 Weeks high/low (HK$) 52 周高/低 (HK$) 4.780 / 2.930 FY20 NPL Ratio (%) FY20 不良贷款率 (%) 2.0 Source: the Company, Guotai Junan International. See the last page for disclaimer Page 1 of 8 [Table_PageHeader]China CITIC BANK (00998 HK) China CITIC Bank’s (the "Company") shareholders' net profit decreased by 9.4% YoY in 1-3Q20. In 1-3Q20, mainly influenced by the decline in market interest rates and the repricing of LPR in our view, NIM] 1 decreasedr a M t byh 12g bpsi R YoY_ toe 2.00%l b a . T [ Net interest income was RMB99,058 mn, up 5.2% YoY, which was mainly driven by the expansion of interest-earning assets. Non-interest income increased by 4.8% YoY to RMB50,449 mn. Growth in non-interest income was primarily attributable to income from bank card fees and net investment income in 1H20, but both items performed relatively poorly in 3Q20. Among non-interest income, net fee and commission income increased by 1.0% YoY to RMB36,540 mn. The Company’s operating expenses amounted to RMB36,056 mn, down 5.2% YoY. Asset quality declined; the Company’s NPL ratio was 1.98% as of the November 2020 end of 3Q20, up 0.15 ppts compared with the end of 1H20, or up 0.33 ppts compared with the end of 2019. In 3Q20, the 20 Company's impairment losses increased by 25.1% YoY, which was one of the main reasons for the decrease in net profit. NPL coverage ratio decreased by 5.17 ppts compared with that at the end of 2019 to 170.08%. PBT was RMB44,153 mn, down 10.4% YoY. In 1-3Q20, the Company’s shareholders' net profit was RMB36,918 mn, down 9.4% YoY. Exhibit 1: CITIC Bank YoY growth of operating income, Exhibit 2: CITIC Bank NIM net interest income, net fee income, impairment losses and net profit 120.0% 3.00 % 100.0% 2.50 80.0% 2.00 ] 2 r a M t h g i R _ e l b a T [ 60.0% 40.0% 1.50 20.0% 1.00 0.0% -20.0% FY13 FY14 FY15 FY16 FY17 FY18 FY19 1-3Q20 0.50 -40.0% 0.00 Net interest income Net fee income FY13 FY14 FY15 FY16 FY17 FY18 FY19 1-3Q20 Operating income Net profit Impairment losses Source: the Company. Source: the Company. (00998 HK) Exhibit 3: CITIC Bank NPL ratio Exhibit 4: CITIC Bank NPL coverage ratio 2.50 % 350.00 % 中信银行 300.00 288.25 1.98 2.03 1.99 2.00 1.77 250.00 206.62 199.89 181.26 179.18 1.69 1.68 1.65 1.75 170.08 1.50 200.00 169.44 175.25 165.24 1.43 167.81 1.30 150.00 157.98 China CITIC BANK 1.00 1.03 155.50 100.00 0.74 0.50 50.00 0.00 0.00 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 3Q20 20E 21E 22E FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 3Q20 20E 21E 22E Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International. The commencement of CITIC Wealth Management is expected to contribute to the Company's transformation of asset management business and benefit the Company's healthy development of the asset management business in the near future. The Company formed a product line with fixed-income products as the body, and multi-asset products and equity products as the two wings; the scale of wealth management products is growing steadily. Meanwhile, the Company made achievements in the transformation of asset management business. As at the end of 1H20, the Company’s existing scale of non-risk-bearing wealth management products recorded RMB1,152.777 bn, up 4.49% compared with the end of the 2019, in which the proportion of NAV products was further increased to 67.70%, up 8.23 ppts compared with the end of the 2019. In Report June 2020, the Company received the reply of the China Banking and Insurance Regulatory Commission on Approving the Commencement of Business of CITIC Wealth Management Corporation Limited in which the CBIRC approved the commencement of business of the wholly-owned subsidiary of the Company, CITIC Wealth Management. According to the reply, Company CITIC Wealth Management was established in Shanghai with registered capital of RMB5 bn, and mainly engages in wealth See the last page for disclaimer Page 2 of 8 [Table_PageHeader]China CITIC BANK (00998 HK) management-related business such as issuance of public and private wealth management products, and wealth management consultation and advisory.