In 2020, the stock prices of urban commercial banks listed on H shares showed differentiation.
16 H-share Chinese city commercial banks (Weihai Bank (Hong Kong Stock 09677) was not included in the statistics due to its short listing time), but the share price of Zhongyuan Bank (Hong Kong Stock 01216) Co., Ltd. (hereinafter referred to as " Zhongyuan Bank ", 1216.HK) fell by as high as 13.52% last year.
As the only provincial urban commercial bank in Henan Province, Zhongyuan Bank has been at a high level in recent years, and the provision coverage ratio of has continued to decline, and the risk compensation ability is worrying.
In addition, the bank has been repeatedly punished for illegal and irregular behaviors, including the fact that working capital loan was illegally misapproved to real estate companies, the inadequate post-loan management led to the misappropriation of personal business loans, the financial manager steals customer financial funds, and authorizes personnel who do not have senior executive qualifications to exercise their executive powers.
Regarding the above situation, "Investors Network" sent a letter to Zhongyuan Bank to inquire about the relevant situation, but the other party did not reply.
The stock price fell sharply
Zhongyuan Bank is the only provincial legal person bank in Henan Province. It was established in December 2014 and was listed on the main board of the Hong Kong Stock Exchange in July 2017. It has been less than 3 years since its establishment to its listing in H shares.
The initial public offering price of H shares was HK$2.45 per share. Since its listing, the share price of Zhongyuan Bank has been sluggish. Especially in 2020, the bank's share price showed a cliff-like decline. The current price (11:00 on January 26) is HK$1.05 per share (see Figure 1).
not only has the stock price performed sluggishly, but the trading volume of Zhongyuan Bank is also sluggish. The reason is mainly related to its own poor performance indicators.
The non-performing loan rate is high and the profitability is low.
In terms of asset quality, the non-performing loan rate of Zhongyuan Bank has been above 2% in recent years. At the end of June 2020, the bank's non-performing loan ratio was 2.27%, an increase of 0.04 percentage points year-on-year.
At the same time, the bank's provision coverage ratio continued to decline, and capital adequacy ratio also continued to decline, and capital adequacy was under pressure (see Table 1).
In this regard, China Chengxin's research report also mentioned that the bank "has arisen in bad balance, provision coverage ratio declines, some investment assets are impaired, and asset quality is facing downward pressure."
In addition, the two measurement indicators of Zhongyuan Bank’s profitability are both lower than regulatory requirements.
According to the "Core Indicators for Risk Supervision of Commercial Banks (Trial)", the profit margin of commercial banks' assets should not be less than 0.6%, and the profit margin of capital should not be less than 11%. The 2020 semi-annual report shows that Zhongyuan Bank's revenue was 10.592 billion yuan, a year-on-year increase of 9.7%, and a net profit of 2.026 billion yuan, a year-on-year decrease of 2.5%, and an asset profit margin of 0.57%. The capital profit margin can be calculated to be nearly 7%.
According to the research report released by Zhongchengxin in January, based on the 2019 annual report, among the four banks, Zhongyuan Bank has the highest total assets and owner's equity, but its net profit is the lowest. It is not difficult to conclude that its asset profit margin and capital profit margin are the lowest among the four banks (see Table 2).
So the question is, Zhongyuan Bank and Zhengzhou Bank (Hong Kong Stock 06196) are both in Zhengzhou City. According to Wind data, Zhongyuan Bank 's business network covers the entire province of Henan Province, and exceeds Zhongyuan Bank 's Zhongyuan Bank 's Zhongyuan Bank in terms of branches and asset scale. Why is the profitability indicator inferior to the latter?
There are many "disputes" in the outlets
Public information shows that Zhongyuan Bank was formed by 13 local urban commercial banks, which can be said to be a "big deal" of the merger of city commercial banks at that time.
As of June 30, 2017, the bank's business network includes 1 head office business department, 9 subsidiaries of village banks and 1 subsidiary of consumer finance companies, 17 branches, 421 branches (including 305 urban branches and 116 county branches), a total of 439 business outlets, covering 18 provincial municipalities and 82 counties, achieving full coverage of provincial municipalities and nearly 80% of county towns.
is spread throughout the province's outlets. The complex architecture has brought growth to Zhongyuan Bank , while and also brings a lot of "trouble" to it.
The latest "trouble" comes from its third largest shareholder (2020 interim report) Yongmei Holdings.
Previously, the "20 Yongmei SCP003" bond issued by Zhongyuan Bank as the main underwriter, on November 10 last year, due to the shortage of working capital of Yongmei Holdings, the principal and interest were not paid in full on time, which constituted a substantial default, with a total principal and interest amount of 1.032 billion yuan, which attracted widespread attention.
, and Bank of China (Hong Kong Stock 03988) Inter-market Dealers Association released self-discipline punishment information on January 15, showing that Zhongyuan Bank , as the lead underwriter, violated the relevant self-discipline management rules of the interbank bond market in the process of providing intermediary services. It was given a warning by the Inter-Bank Dealers Association and ordered it to make comprehensive and in-depth rectification of the problems exposed in this incident.
"Yongmei Incident" just one month ago, Zhongyuan Bank received three more fines in December, all of which were caused by branch violations.
On December 11, the official website of Banking and Insurance Regulatory Commission showed that Nanyang Branch was fined 400,000 yuan for misappropriating loans in the process of issuing special epidemic prevention loans; in late December, Puyang Branch was fined 300,000 yuan for inadequate post-loan management and misappropriating loan funds; in late December, Shangqiu Branch was fined 300,000 yuan for transferring loans to deposit with loans and not being approved for qualifications to perform the duties of senior management personnel.
Qichacha shows that in recent years, the number of legal disputes in Zhongyuan Bank has increased dramatically. In 2018, 2019 and 2020, the number of judicial documents involving Zhongyuan Bank was 9, 132 and 1,475 respectively, a surge of 163 times in three years. There were 48 copies in less than one month in 2021, mainly payment orders caused by financial loan contract disputes and credit card overdue breach (see Figure 2).
Loan management violations occur frequently, and disputes caused by loans soared, and the bank's control and corporate governance are under pressure.
Macro research director of China Minsheng Bank (Hong Kong Stock 01988) Research Institute, Wang Jingwen, also a senior researcher at Pangu Think Tank, Phoenix International Think Tank, and the top 100 Hong Kong Stock Stocks Research Center, shared to Investors Network, "The merger and reorganization of small and medium-sized banks is an important way for banks to achieve complementary advantages and resource integration. It can achieve resource integration and brand improvement, optimize financial resource allocation, and improve the local financial development pattern. However, in the process of merger and reorganization, issues and challenges involving equity relations, personnel arrangement issues, resource allocation issues, and regulatory policy support cannot be ignored. It can be said that opportunities and challenges coexist."
In the capital market, the stock price fell last year and the transaction was sluggish, which is related to the low profitability of Zhongyuan Bank itself, and the increase in asset quality and control pressure. Supervision will become more stringent in 2021. How the bank will better integrate provincial resources, fully coordinate with various branches to enhance profitability, and at the same time conduct reasonable and compliant management, "Investors Network" will continue to pay attention to how the bank will better integrate provincial resources, fully coordinate with various branches to enhance profitability, and at the same time conduct reasonable and compliant control.
This article is from Investors Network
