In the past two decades, banking stocks were once the most popular stocks in the A-share market. But for most investors, investing in banking stocks is not an easy task.

Banking seems simple, with one hand absorbing deposits and one hand lending, but there are many stresses behind Qian Shengqian's business.

From the perspective of business model, banks are typical industries with profits ahead and risks behind. This means that banks have interest income from the first month after issuing loans, but the risks often take several years to be exposed.

Even if the risk is exposed, banks can delay its impact on the current year's net profit by adjusting the provision coverage ratio and adjusting the caliber of non-performing assets.

Especially when the bank itself is still a highly leveraged business with trillions of assets, there may be tens of billions of adjustment space.

It is precisely because of this that most domestic banks seem to be operating steadily and their net profit is increasing year by year, but they often become the object of "abandonment" by investors. From this perspective, those seemingly "cheap" bank stocks may not be cheap.

After all, investors will never take advantage of the market.

/0 1/

Why does the bank's net profit have "moisture"?

Before the investment, many "old people" in the secondary market said that the net profit of banking stocks was "moisture". Although it sounds incredible, this view is reasonable.

The "moisture" of the net profit of bank shares has a great relationship with its business model.

The main income of banks is "interest margin", which first absorbs deposits at a lower interest rate and then lends them to customers at a higher interest rate to earn intermediate interest margins. Take Bank A as an example. In 20 19, the revenue of bank a was 269.7 billion yuan, of which the net interest income accounted for 64. 18%.

Seeing this, you may ask, how can profits have "moisture" in such a simple and rude business model? Don't worry, let's continue.

The calculation method of ordinary company's net profit is very simple, and the income is deducted from the cost. But banks are different. In their costs, in addition to the necessary expenses, they also include bad debt losses accrued. It is not difficult to understand that in the process of lending, there will inevitably be some bad debts, and this part of the loss will naturally be borne by the bank.

For security reasons, the regulatory authorities will require banks to "take out" certain profits in advance to cover potential bad debts. The ratio of the bank's profits to the final bad debts is the provision coverage ratio. For example, the bank reserves 200 billion, bad debts 654.38 billion, and the provision coverage ratio is 200%.

According to regulatory requirements, the bank's provision should be greater than 150% of bad debts. In other words, as long as the bank's provision ratio is high enough, even if the bad debts in a certain year are not small, there is no need to accrue too much asset impairment, and the net profit in that year will be better.

Take Bank A as an example. From 2065438 to 2009, the impairment loss accrued by Bank A was 6165438+500 million yuan, but its new bad debts were about 44.2 billion yuan. In other words, the impairment loss accrued by Bank A in that year can not only completely cover the newly generated bad debts, but also add 654.38+06.95 billion yuan.

The extra 654.38+0.695 billion yuan is to increase the coverage of the company's bad debt provision and ensure the future net profit. If Bank A has more bad debts in a certain year, it can increase profits by reducing impairment losses.

From this perspective, net profit can not objectively reflect the actual operation of banks. This is also the reason why the market thinks that the bank's net profit has "moisture".

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Classification of bank loans,

Become a "reservoir" for bad debt adjustment

As we all know, the bank is an enterprise in Qian Shengqian. This has also led to banks generally owning higher operating leverage.

Take Bank A as an example. At the end of 20 19, the shareholders' equity of Bank A was only 0.6 18 trillion yuan, but its total assets were as high as 7.4 17 trillion yuan, ten times that of operating leverage.

For banks with trillions of assets, it is really easy to "earn" tens of billions of profits every year through specific adjustment means.

Take Bank B as an example. In 20 16, the total assets of bank b were 5.86 trillion. In that year, the company's revenue was 65.438+0608 billion yuan, up 9.7% year-on-year, and the net profit attributable to the mother was 536.5438+0 billion yuan, up 4.93% year-on-year.

Although the growth rate of performance is not fast, it looks stable. So, can Bank B pay attention? Don't jump to conclusions! If you had seen the way Bank B disposed of its assets, you might not have said so.

In 20 16, the total loan of bank b reached 2.76 trillion yuan, which means that the net profit of bank b will decrease by 27.6 billion yuan for every percentage point increase in bad debts. Adding two points will make it face a loss at 20 16.

Then, how much did the non-performing loan ratio of Bank B increase in that year? In 20 16, the NPL ratio of Bank B was 1.89%, up by 0.33 percentage points year-on-year. Don't think it's over.

Bank loans are divided into five levels, namely, first-class normal loans, second-class concern loans, third-class subprime loans, fourth-class doubtful loans and fifth-class loss loans.

It should be noted that tier 1 normal loans and tier 2 concerned loans are not included in non-performing loans. Banks also do not need to make provision for bad debts for these two types of loans. However, in fact, secondary concern loans are often loans with signs of default, which are also called "reservoirs" of non-performing loans by investors.

In 20 16, the balance of secondary loans of Bank B was105.5 billion yuan, accounting for 3.82% of the total loans, an increase of 40.8 billion yuan compared with 20 15.

From 2065438 to 2006, B-interest loans surged, which means that there will be a lot of bad debts in the future. Only through adjustment, this part of bad debts was not reflected in that year.

In the same year, the balance of the latter three types of non-performing loans of Bank B was 5,265,438+78 million yuan, an increase of1765,438+24 million yuan. In the same period, the reserve balance of Bank B increased by 14 1 100 million yuan.

As you can see, the increase of bad debt balance of Bank B has exceeded the increase of provision. If part of tier-2 loans are included in non-performing loans, their provisions are bound to increase, which will further reduce their net profit for the year.

From 2065438 to 2006, the net profit of Bank B's homecoming only increased by 4.93%. In other words, as long as non-performing loans continue to increase, the decline in net profit is inevitable.

Therefore, it is not difficult for a bank with trillions of assets to make its performance look stable through the adjustment of bad debts. From this perspective. If investors pay too much attention to profits, their attention to bank stocks is of little significance.

/03/

Low-value banking stocks,

It may not be cheap!

"Untrustworthy" profits mean that seemingly cheap bank stocks may not be cheap.

In fact, the bank development model of "sacrificing asset quality for scale" in the past is likely to make you fall into the "trap" of low valuation.

This time, let's take Bank A and Bank B as examples. By the end of 20 19, the assets of the two banks were 7 trillion yuan and 7.5 trillion yuan respectively, with similar scales.

However, there is a huge gap between the profitability of the two banks. Bank B's revenue is only about 7 1% of that of Bank A, and its net profit is only 64% of that of Bank A..

It should be noted that the difference in profitability between the two banks cannot be truly reflected only by revenue and net profit data.

As can be seen from the above figure, in terms of loan loss provision, Bank A is twice as high as Bank B ... But whether it is non-performing loans or concern loans, Bank B is much higher than Bank A. ..

If Bank B wants to raise the provision coverage ratio to the same level as Bank A, it must provide at least 200 billion yuan, while the net profit of Bank B B20 19 is only 58.9 billion yuan.

Seeing this, you should understand how different these two banks are. Obviously, the assets are close in size and they are all engaged in lending business, but the operating results are quite different. Therefore, we see that bank stocks with low PE and low PB in the market are probably not worthy of attention.

What's more, banks are highly leveraged businesses. High leverage will not only amplify the advantages of enterprises ten times, but also amplify the disadvantages of enterprises ten times. Once the risks begin to be exposed, the situation will only get worse.