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Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

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Earnings Supported By Massive Cut In Provision: Ping An Bank (00001.CH) [PAB] reported 1Q20 bottom-line results of CNY 8.5 bn, a CNY 4.0 bn (86.9%) increase linked quarter. Improvement linked quarter can be attributed to a CNY 2.6 bn (14.0%) decrease in loss provisions – as credit quality deteriorated, and a CNY 1.8 bn (16.3%) decrease in fee revenues;</li>
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Credit Risk Increasing: PAB’s NPLs increased CNY 2.1 bn (5.5%) to CNY 40.3 bn on a linked quarter basis. Given the CNY 121.0 bn (5.2%) linked quarter loan growth, however, NPLs/TLs remained flat at 1.65%. The level of net new NPLs accelerated CNY 7.1 bn during 1Q20 or 74.3% on an annualized basis, however, suggesting PAB is far from being out of the woods; and</li>
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Evolving Strategy: New loan growth flowed to corporates (45% flowed into the real estate, transportation, infrastructure and healthcare sectors), we question as to whether there has been a derailment in PAB’s retail strategy.</li>
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Earnings Supported By Massive Cut In Provision: Ping An Bank (00001.CH) [PAB] reported 1Q20 bottom-line results of CNY 8.5 bn, a CNY 4.0 bn (86.9%) increase linked quarter. Improvement linked quarter can be attributed to a CNY 2.6 bn (14.0%) decrease in loss provisions – as credit quality deteriorated, and a CNY 1.8 bn (16.3%) decrease in fee revenues;

Credit Risk Increasing: PAB’s NPLs increased CNY 2.1 bn (5.5%) to CNY 40.3 bn on a linked quarter basis. Given the CNY 121.0 bn (5.2%) linked quarter loan growth, however, NPLs/TLs remained flat at 1.65%. The level of net new NPLs accelerated CNY 7.1 bn during 1Q20 or 74.3% on an annualized basis, however, suggesting PAB is far from being out of the woods; and

Evolving Strategy: New loan growth flowed to corporates (45% flowed into the real estate, transportation, infrastructure and healthcare sectors), we question as to whether there has been a derailment in PAB’s retail strategy.


Ping An Securities Group (Holdings) (231 HK)

Ping An Insurance (H)

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