Postal Savings Bank is not much underestimated than other banks.

Editor’s note: This article is from the micro-channel public number “brocade” (ID: jinduan006), Author: Charlie investment.

The author is the manager of Charlie Investment Fund. This article is based on public information and is only used for information exchange and does not constitute any investment advice.

Since the Hong Kong Stock Exchange disclosed the Himalaya Postal Savings Bank (HK:01658) in December last year, there has been a lot of discussion. There are also many questions about why Li Lu chose Postal Savings Bank instead of China Merchants Bank, which is outstanding in all aspects.

What are the advantages and disadvantages of Postal Savings Bank of China? This article looks at the current situation of Postal Savings Bank from financial data.

Let’s talk about the conclusion first:

1. Although the Postal Savings Bank of China has invested heavily in personal loans, it has brought a higher rate of return, but because of the savings agency fees at the end of the deposit cost, the rate of return on interest-earning assets is not high, ROA (return on assets) Comparable with Bank of Communications, at a lower level;

2. Postal Savings Bank’s non-performing rate and overdue rate are the lowest among the major banks, with high asset quality;

3. The provision coverage rate of Postal Savings reaches 400%;

4. From the adjusted PB (excess provisions are released into net assets), PSBC’s PB (price-to-book ratio) indicator has no advantage;

From a comprehensive perspective, the Himalayas are most likely to value asset quality.

01 Efficiency of capital utilization

Income created by the unit’s total assets in 2019 unit billion yuan

From the 2019 annual report, the Postal Savings Bank of China used an average of 990 million total assets to generate 276.9 billion revenue. The average total asset revenue was 2.81%, and its revenue capacity was higher than that of the Agricultural Bank of China and the Bank of China. But less than that of Industrial and Commercial Bank of China and China Construction Bank. Regardless of the quality of assets, the Postal Savings Bank of China does not have outstanding capital efficiency.

Of course, banks are a highly leveraged industry, and there are high risks in the operation process. It depends not only on the quality of revenue, but also on the level of risk corresponding to revenue creation. The efficiency of a single fund application does not reflect everything.

Like other businesses, the level of profitability depends on the price and cost of the product. The efficiency of bank funds use is affected by two major aspectsImpact: the investment of interest-earning assets and the cost of interest-bearing liabilities.

02 Return on interest-earning assets

In the mid-year report of 2020, the total return on interest-earning assets of Postal Savings Bank of China is the highest among the major state-owned banks, and under the impact of the epidemic, the rate of return has fallen the least, and its ability to resist risks is strong. It is characterized by High returns and low decline.

A closer look at the composition and structure of interest-earning assets shows that Postal Savings Bank of China has advantages in terms of return on customer loans and advances, as well as deposits and loans.

03 Client loans and advances

Note: The rate of return is annualized data

The yield of personal loans is higher than that of corporate loans. 54% of PSBC’s loans are for personal loans, which is more than 20% higher than other banks, and the interest rate of PSBC’s personal loans is 5.42%, which is nearly 60 basis points higher than the traditional four major banks.

Why the Postal Savings Bank of China can achieve a higher yield rate than other banks? The guess is that it is related to its loan structure. The next step is logical proof or refutation.

The other personal loans of PSBC accounted for 35.16%, which is much higher than other banks. Looking at the financial report, it can be seen that this part is mainly personal consumption loan business (359.2 billion) and small loan business (709.3 billion).

“The Bank strongly supports the development of production by small and micro business owners, individual industrial and commercial households, new agricultural business entities and traditional small farmers…” It can be seen that this part of the group investedPut more, it also brings a higher rate of return.

Interested friends can continue to in-depth analysis of the postal savings micro-loan business model, groups, etc., vaguely feel that this is the most valuable part of the postal savings. In the process of helping others, they have realized their own benefits, and value investment is the best embodiment of meaningful and the cleanest money.

04 Deposit cost

After reading the situation on the asset side, let’s take a look at the cost situation:

Looking at the “raw materials” used by banks for credit, investment, etc.-interest payment liabilities, we can see that the customer deposits of Postal Savings Bank accounted for 97%, while other major banks only accounted for about 80%. There are advantages and disadvantages. The advantage is that there is a steady stream of “low-cost” deposits. The disadvantage is that it does not conform to the principle of diversification of liabilities and relies heavily on a single channel.

Another interesting phenomenon can be seen. Both the Agricultural Bank of China and the Postal Savings Bank of China have relatively low customer deposit costs. The main reason is that online stores are spread all over the country, especially in the Midwest, where stock banks are not willing to go. cover.

But careful investors can find that the low cost of Postal Savings Bank has been quoted. In fact, the cost of Postal Savings Bank is not low, even much higher than that of Gongnong Zhongjian. The main reason is the existence of postal savings agency fees.

The Postal Savings Bank of China was established in 2007 with a relatively short period of time. As of the end of June 2019, there were 39,700 outlets in total, but only 7,945 self-operated outlets. The rest are the agent outlets of the parent company Post Group.

There are not many real online stores of the Postal Savings Bank of China. A considerable part of its deposits is realized through the postal outlets of the parent company China Post Group. This has resulted in a large amount of agency savings fees. Paid by the parent company.

The 2019 annual report shows that the agency fee paid by Postal Savings Bank to the parent company reached 76.15 billion, with a rate of about 1.32%. If this part of the fee is added, the cost of customer deposits of PSBC will reach about 2.39%, which is a little advantage No, it has fallen to the level of stock banks.

Check the prospectus of Postal Savings Bank. The State Council has the power to decide the agency relationship, and both parties have no right to terminate. There is no clear statement that this fee will be cancelled sometime in the future.

05 Adjusted interest rate

Based on the principle that substance is greater than form, the interest margin after calculating the cost of deposits by the agency savings of Postal Savings Bank of China is as follows:

The annualized net interest rate after deducting the cost of deposits is only 1.61%, which is about 50 basis points different from that of industry, construction, and agriculture.

Although the loans at the end of PSBC’s asset placement are invested in high-yield personal loans, especially high-yield small loans, considering the cost of savings agency fees, there is no overall advantage.

06 Asset quality

From the perspective of asset quality

Whether it is the non-performing loan rate or the overdue loan rate, the Postal Savings Bank of China is significantly lower than its peers. Is TA’s risk control system (public/private) powerful, or because of historical reasons?

Why has the postal savings bank’s provision rate of more than 400% not dropped? What is the reason for maintaining such a high level? These questions need to be answered.

According to the 210% provision rate of the five major banks, the required impairment provision is about 101.9 billion, and about 91.7 billion is released, which is about 1.05 yuan per share, which is equivalent to 1.26 Hong Kong dollars.


Considering the restoration of excess provisions, the five major banks have made an average of 210%, and released about 91.7 billion of excess provisions, which is equivalent to 1.05 yuan per share and 1.26 Hong Kong dollars. As of January 18, 2021, the adjusted PB valuation indicators of PSBC H shares are as follows:

Postal Savings Bank is not much underestimated than other banks.