Ping An Bank Co Ltd – Robust deposit growth and improving asset quality June 24, 2019 1007

Ping An Bank Co., Ltd. provides commercial banking services in China. The Company offers deposit services, loan services, bill services, settlement services, credit card services, international banking, online banking, and other related services.


1Q19 Results Overview

  • Ping An Bank (PAB) reported 1Q19 net profits of Rmb7.4bn, up 13% YoY.
  • Earnings were driven by rapid growth 13% QoQ in retail deposits. Net Interest Margin (NIM) improved 3bps QoQ to 2.53% driven by declining interbank funding costs.
  • NPL ratio reported 1.73% contracted by 2bps QoQ. However, the rise in NPL % of non-collateralized consumption loans, a source of concern on asset quality going forward.
  • Overall, we consider 1Q19’s result positive. Mainly because of company’s robust deposit growth and improving asset quality.



+ NIM up slightly by 3bps QoQ but surged 28bps YoY. PAB’s NIM expansion was mainly contributed by a decline interbank funding costs by 9bps QoQ (note that industry 3M-SHIBOR fell 17bps QoQ). However, we expect NIM momentum to weaken due to pressure to lower interest rate and limited upside in further interbank funding cost savings.

+ Loan to deposit ratio (LDR) up 173bps YoY to 88.85% but slightly down 409bps QoQ. Retail deposits went up by 13% QoQ (vs corporate deposits of 6% QoQ). With core capital ratio increased 21bps QoQ to 8.75%, PAB have more room for giving loans.

+ Improving asset quality and NPL coverage ratio. The NPL ratio reported 1.73% contracted by 2bps QoQ; at the same time, NPL coverage ratio edged up by 15ppt QoQ to 171% at end 1Q19. Under the background that regulators reduce the regulatory requirement of provision coverage ratio to 120%-150%, the company has enough liquidity room for future.

+ Non-interest income grew 19% QoQ and 25% YoY. Net fees grew 26% QoQ and 11% YoY, mainly driven by the fast expansion of credit card transaction amount. Non-fee income grew 188% YoY due to investment income (+518% YoY), and management attributed this to the accounting changes which classified part of the net interest income into investment income since 3Q18.



– Un-collateralised personal loan NPL ratio continues to climb. NPL ratio for credit card loan and Xin Yi Dai (XYD, un-collateralised personal loans) went up by 2bps and 14bps QoQ respectively, but from a low base.



Overall, we consider 1Q19’s result positive. Mainly because of company’s robust deposit growth and improving asset quality.



Red line = 200 periods moving average

Blue line = 50 periods moving average

Green line  = 22 periods moving average


Support 1: 11.99        Resistance 1: 14.74

Support 2: 9.17

Ping An Bank’s bullish spike last week is the stock reflecting its desire for a strong bullish rise and the technical factors presented shows that Ping An Bank will continue to rise higher in the long run.   

  • 6 years of bullish accumulation into the ascending triangle is the key bullish formation that confirms the future bull run.
  • Prices have been trending above 3 key major moving averages.
  • The highs have been tested for 4 times, and the resistance may get weaker as resistance being tested more than 3 times without breaking new lows shows that the price may want to break new high.
  • Price has rejected the 50% Fibonacci retracement level, followed by a strong bullish run.
  • Stochastic crosses near the oversold zone and the following 2 period strong bullish movement proves that the bullish momentum is strong.

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