Our reporter Lu Dong
After the long Chinese New Year holiday, the stock prices of A-share listed banks changed their pre-holiday strong upward trend and began to fluctuate sharply.
The trend of individual stocks of different banks has diverged greatly, and the price-to-book ratio has also appeared "unevenly hot and cold".
As of the close of last Friday, the highest PB value of listed banks was close to 2.4 times, and the lowest was only 0.47 times.
Uneven price-to-book ratio
After entering 2021, the stock prices of A-share listed banks continued their strength in December last year, and the stock prices of 37 A-share listed banks collectively rose.
Statistics from iFinD show that from New Year’s Day this year to February 10th before the Spring Festival, the cumulative increase of the banking sector reached 12.99%, ranking fifth among the 28 first-level industry indexes of Shenwan. In recent years, a wave of strong upside has been rare.
In this round of rising, China Merchants Bank, Industrial Bank, Ningbo Bank and other share prices once hit a record high.
However, it has not been long for the banking sector to seize the "C position" in the A-share market.
After the end of the Spring Festival holiday, the overall performance of the banking sector was weak. The sector index rose less and fell more, with a cumulative decline of 1.27%, and fell out of the top ten in the ranking of the Shenwan industry index.
Lv Changshun, the chief researcher of Beijing Zhonghe Yingtai Financial Consulting Co., Ltd., said in an interview with a reporter from the Securities Daily that since the Spring Festival, the banking sector has fluctuated sharply.
On the one hand, due to the previous excessive increase, the valuation of individual banks rose too fast, so there was a callback after the holiday.
On the other hand, it was affected by the recent overall market decline.
However, Lu Changshun believes that the recent market performance will not affect the overall trend of the subsequent banking sector.
First of all, the valuation of the banking sector is still in a low value; secondly, the overall performance of the listed banks in the annual report last year was not bad, which will also help the stock price to a certain extent.
It is worth noting that after the overall strengthening at the beginning of this year, the overall valuation of the banking sector has increased significantly, and the number of "broken" banks has decreased, but there is still a large gap in the price-to-book ratio of different banks.
A reporter from the Securities Daily found that as of the close of last Friday, the PB values of Bank of Ningbo and China Merchants Bank had both more than doubled, reaching 2.39 and 2.17 respectively. In sharp contrast, there are still many banks’ PB values. The value is less than 0.5 times, the highest price-to-book ratio is more than 5 times the lowest price-to-book ratio, and the phenomenon of "uneven hot and cold" is becoming more and more obvious.
ROE level affects stock price trend
Lu Changshun believes that the outstanding differentiation of bank stock market net ratio is directly related to the level of ROE (return on equity) of bank stocks.
For banks, one of the important criteria for whether their performance is qualified or outstanding is ROE. The standard for qualified banks should be a ROE of 15% or more. Bank stocks that are far below this standard are unlikely to be recognized by the market.
If the bank's ROE level is low, its price-to-book ratio will not be too high. Therefore, some banks have a net ratio of more than 2 times and some banks are less than 0.5 times.
Statistics from iFinD show that among the 37 listed banks in Shanghai and Shenzhen, there are 5 banks with ROE over 15%, namely Bank of Chengdu, China Merchants Bank, Bank of Guiyang, Bank of Ningbo, and Bank of Nanjing.
In addition, Industrial Bank, which has performed well in the secondary market in recent months, has a P/B ratio of more than 13 times.
Due to the overall performance of banks last year, all parties in the market are also looking forward to the profitability of listed banks this year.
The steady growth of performance will further push up the bank's ROE level and help the bank's stock price to rise steadily.
Judging from the 23 banks that have disclosed their performance reports, the overall performance in 2020 has maintained a steady growth. Last year, the total net profit attributable to shareholders of the parent company was 419.958 billion yuan, a year-on-year increase of 2.41%.
Except for the slight year-on-year decline in net profits of the two banks, the net profits of the remaining 21 listed banks all achieved positive growth.
Among them, the net profit of five listed banks increased by more than 5% year-on-year.
Li Qian, assistant general manager of the financial business department of Oriental Jincheng, said in an interview with a reporter from the Securities Daily that it is expected that the average net profit growth rate of most A-share listed banks in 2020 will be positive year-on-year.
On the one hand, the performance of listed banks has recovered, thanks to the further recovery of the domestic economy and the further release of corporate demand, and the pressure on the banking industry to concession to the real economy has been reduced; The reduction in the scale of quarterly provisions has also contributed to the increase in net profit last year.
Lv Changshun told reporters that whether the banking sector can continue to strengthen, in addition to the stable and good performance of last year's annual report, the most important thing is to see this year's operating conditions.
"With the weakening of the impact of the epidemic and the low base in 2020, it is expected that the bank's profit growth this year will be better."