Minority Zhou Liang: Three Misunderstandings of Bank Stock Deposits in the Market-Drainage network

Minority Zhou Liang: Three Misunderstandings of Bank Stock Deposits in the Market-Drainage network
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The market has three major misconceptions about bank stock deposits. The current price of bank stocks is very cheap, taking Industrial and Commercial Bank of China as an example. Currently, only0.7A price to book ratio of times. If the net assets of a company are one yuan, the current stock price in the secondary market is only7Mao Qian, this is called0.7A price to book ratio of times. And Industrial and Commercial Bank of China's return on equity is13%That is to say1The net asset of one yuan can be earned in a year1hair3Divide the money. So you spend7I bought one yuan worth of net assets with a penny, and it can still increase every year1hair3Divide the money, invest for a year, and hold it for almost all returns20%. But for such an investment, many people say that although it is cheap, is it a value trap?Will it never rise again, and will the stock price continue to decline?There are three main concerns in the mainstream view. The first concern is that the asset quality of China's banking industry is not good. Although the published non-performing loan ratio is not very high, there is actually a lot of asset moisture, and it is believed that the actual non-performing loan ratio is much higher than the published non-performing loan ratio.
The second concern is that banks are a monopolistic industry. You see, the recent executive meeting of the State Council has asked banks to give up profits this year1.5Trillion yuan, the majority of the bank's profits are given away, which has a significant impact on the bank. The third concern is that the impact of the epidemic this year is quite severe, especially for many small and medium-sized enterprises. Loans for these enterprises will not be repaid and will be delayed, which will lead to an outbreak of non-performing assets in banks. Our research found that the mainstream view is too pessimistic. In fact, these three bearish factors do not have a significant impact on the profitability of banks. Why do you say that? Let's first talk about mainstream concerns about the quality of bank assets.
Many people believe that the true non-performing loan ratio of banks is actually very high, but it is only hidden and not disclosed, so we conducted research on this. If there are some subjective judgments in the identification of non-performing assets, overdue loans are actually a very objective indicator, because as long as the loan is not repaid when it expires, it becomes overdue. We compared the overdue rate and non-performing loan rate of some large banks and found that the difference is not significant. If all overdue loans are considered non-performing, it is found that the difference between them and non-performing loans is not significant. And we have observed the changes in non-performing asset cycles over the past few years, and in fact, the most frequent outbreak of non-performing assets in banks is not in these past year or two, but rather2017The highest number of years. In recent years, we have been gradually addressing some of the past negative issues. So we see that the evolution of the bad cycle here is actually getting better and better, rather than getting worse and worse.
We have studied and found that for those large banks, including the four major banks and those large joint-stock banks, we believe that their asset quality is not a problem, and there is no difference between the published non-performing loan ratio and the actual non-performing loan ratio. The second concern many people have about banks is that the State Council executive meeting requires banks to offer discounts1.5Trillion yuan. Many people believe that the net profit of the entire banking industry for a year is approximately1.8Trillion yuan, the country requires banks to allow1.5Trillion yuan has completely drained the bank's annual net profit, which must have a huge impact on the bank's earnings this year. This is because everyone is too worried. The bank's concession is not the bank's net profit, but the loan interest.
Banks have both interest income from loans and the cost of deposits for depositors. The interest income from the loan, minus the deposit interest expenses, is his profit. The bank's current interest income from one-year loans is8Trillion yuan, after deducting interest expenses and various expenses, the net profit is1.8trillion And when we say we let the interest go to the loan interest, we let it go from8Go within trillions, not from banks1.8Among the trillion yuan net profit, these are two concepts. So the impact is much smaller.
On the other hand, while granting interest on loans, the cost of funds for banks is also decreasing. Everyone, looking at this year's interest cost, interest rates are actually constantly decreasing. Whether it's the returns of wealth management products or some expected rate of return products, the returns are constantly decreasing. Banks offset a significant impact by reducing the cost of funds and lowering interest rates on these deposits. In the first half of this year, although the bank made several hundred billion yuan in profits, it offset a lot by reducing the cost of funds, so the impact on the bank's net profit is not very significant. Throughout this year, the net profit of banks has actually been basically zero growth. It's called zero growth, not zero profit, and there may be more this year1.8The net profit of around one trillion yuan is on par with last year. The third concern is that the epidemic will affect small and medium-sized enterprises, leading to delayed repayment of payments.
In fact, obtaining a bank loan is not easy. Most bank loans require collateral and collateral to obtain the loan. Even if your company incurs losses, your loan still needs to be repaid. Based on the data we have obtained, there are approximately5%Small and medium-sized enterprises around the world need to defer loan repayments. But we believe that its impact on the overall operation of the bank is minimal, it is just a deferred repayment, not a complete bad debt. Moreover, this only occurs in some small and medium-sized enterprises, and for banks as a whole, its proportion is also very small.
We have found through research that these three major concerns about bank stocks in the market are actually overly pessimistic. But the current stock price precisely includes the pessimistic expectations of most people, making its price very cheap. When most people don't like it, when most people overlook it, this is the real good opportunity to make money. Everyone must be clear.