Pudong FA Bank: NET spreads rebound over expectations

Events: PU FA Bank released 2010, the company in the first half of 2010 to achieve operating income of 22.751 billion yuan, an increase of 6.074 billion yuan, an increase of 36.42%; pre-tax profit of 11.829 billion yuan, an increase of 2.845 billion yuan, an increase of 31.66% , the net profit of 9.081 billion yuan, which is attributable to the shareholder of the parent company, is increased by 2.3 billion yuan, 33.92%, and the basic earnings per share is 0.79 yuan. The second quarter to achieve net profit of 4.978 billion yuan, the chain growth of 21.27%, year-on-year growth of 30.28%. In the first half of 2010, the company's average asset profit margin (ROA) was 0.53%, up 0.07% from a year earlier; Due to a timely replenishment of capital by the company in September 09, the return on equity was diluted, with a weighted average return on equity in the first half of 2010 (ROE)　　Was 12.51%, down 2.59% from a year earlier. The company reported net profit growth of 33.93% Year-on-year, the main driving factor is net spreads rebound and interest-bearing asset scale expansion. The first half of the year net interest margin 2.45%, rebounded 34 BP, contributing net profit growth of 20.28%, income-bearing assets growth of 9.88%, compared to the beginning of 6.21% growth, pulling net profit growth 18.03%, the provision of expenditure reduction of 21% per cent of the fee net increase of 71%　　Also has a positive contribution to net profit, with a 8.91% per cent increase in fee income, which drags net profit growth by 22.43%. Second quarter net profit growth of 21.27% per cent, all factors play a positive role, net spreads rebound and interest-bearing assets scale expansion of the largest role, the two total contribution 10.19%.　　Net profit rose 30.28% in the second quarter, mainly because net spreads contributed 24.44%, and the increase in cost and provision of expenditure weighed on net profit growth by 22.39%. Bad "Double Drop", the provision of provision coverage increased, capital adequacy. As at the end of June, the total assets of the company were $1,781,261,000,000, an increase of $158.543 billion over the beginning of the year, an increase of 9.77%, and $1,444,693,000,000 per deposit, which increased by 149.351 billion yuan and 11.53% , each loan of 1,050,610,000,000 yuan, an increase of 121.755 billion yuan, an increase of 13.11%, the final RMB and foreign currency loan-to-deposit ratio of 73.06% and 65.15% respectively.　　As at June 30, the company's non-performing loans balance of 6.465 billion yuan, reduced by 995 million yuan, the non-performing rate of 0.62%, lower than the beginning of the year 0.18%, the provision of coverage of 302.26%, compared to the end of 09 increased by 56.33%. NET spreads rebounded slightly more than expected. In the listed banks as a whole, the net spreads rebound is not optimistic, the first half of the nim2.45%, Pudong Bank rebounded 34 BP, two quarterly single seasonThe annual NIM for 2.53%, the chain rebound of 11 BP, slightly exceed our expectations, mainly interest-bearing debt cost rate overall decline, and interest-bearing asset yields still fall by 72 BP.　　We expect the company to rely on the net spreads of the debtor to rebound substantially to this, the second half rely mainly on the industry to improve the pricing capacity to improve the net interest margin. Investment advice we maintain the Pudong Bank 10 and 11 performance forecasts, the 2010 attributable to the parent company's net profit growth rate of 26.6%, reached 16.735 billion yuan, earnings per share of 1.22 yuan, 2011 attributable to the parent company shareholders net profit growth of 25%, to 20.916 billion yuan, Earnings per share of 1.53 yuan. The company's current stock price corresponds to the 2010 11.43x/pe and 1.53X/PB, overweight rating.