bestfreeblockchaingamestomakemoney| Vigorously buy bonds to "generate income"! Investment income of more than 80% of listed banks increased in the first quarter

Investment income growthBestfreeblockchaingamestomakemoneyThe key driver is bond yields.

Under the background of narrowing bank net interest margin, investment income has become the income-generating "secret" of many banks in the one-quarter report.

According to Choice data, 36 of the 42 listed banks achieved growth in investment income, and five of them increased their investment income by more than 300% year-on-year in the first quarter. The high growth ranks include not only local city commercial banks such as the Bank of Xiamen and the Bank of Shanghai, but also big state-owned banks such as the Bank of China.

Further penetrating the results, the key driver of investment income growth is bond yields. Since 2023, many banks have made great efforts to buy bonds, the scale of bond investment is high, and they have made a lot of profits in the bond bull market.

Speed up the return on investment

Under the background of interest rate spread pressure, the reporter noticed that the investment income of most banks in the first quarter went against the trend, and even became the "highlight" of income generation. According to the reporter's incomplete statistics, in 2023, among the 42 A-share listed banks, 36 banks achieved growth in investment income, accounting for more than 80%.

According to Choice statistics, five of the 43 listed banks have more than tripled their earnings in the first quarter of this year compared with the same period last year. The biggest growth rate is Xiamen Bank, whose investment income soared from 43.38 million yuan last year to 2. 5 percent this year.Bestfreeblockchaingamestomakemoney80 billion yuan. In addition, the year-on-year growth rates of Bank of Shanghai, Zijin Bank, Ruifeng Bank and Bank of China were 497%, 401%, 370% and 332%, respectively. However, although some of the above-mentioned small and medium-sized banks have increased greatly, from the absolute value of growth, large state-owned banks and joint-stock banks still take the lead. The "top three" of growth were Bank of China, Industrial Bank and CITIC Bank respectively, with year-on-year increases of 11.318 billion yuan, 6.307 billion yuan and 4.96 billion yuan respectively in the first quarter.

From the absolute value of investment income, the banks with investment income exceeding 10 billion yuan in the first quarter of 2023 are Bank of China, Industrial Bank and Pudong Development Bank, with investment income of 14.725 billion yuan, 13.741 billion yuan and 12.782 billion yuan respectively. China Merchants Bank and Industrial and Commercial Bank of China followed, with investment income of 9.503 billion yuan and 9.202 billion yuan respectively.

In addition to the above-mentioned companies, there are 16 banks, including Minsheng Bank, Ningbo Bank, Bank of China and Ping an Bank, which have an investment income of more than 1 billion yuan. The total investment income of 42 listed banks in the first quarter was 133.3 billion yuan, exceeding the 100 billion "mark", up from 92.5 billion yuan last year.

It is worth noting that the dependence of small and medium-sized banks on investment income is more obvious, and the investment income of some banks accounts for more than 50% of non-interest income. The most obvious one is Changshu Bank, whose investment income in the first quarter of this year was 556 million yuan and non-interest income was 403 million yuan, accounting for 137.89 percent. After inquiring about the financial report, the reporter found that the bank's fair value change income and exchange gains were all at a loss, and investment income became the absolute main force in non-interest income.

The reporter combs according to Choice data, in 42 listed banks, 23 banks' investment income accounts for more than half of non-interest income, basically all of them are city commercial banks.

The proportion of investment income of the four major banks is relatively small. In 2023, the investment income of ICBC, Agricultural Bank of China, Bank of China and Construction Bank was 45.876 billion yuan, 27.749 billion yuan, 25.172 billion yuan and 16.887 billion yuan respectively, accounting for 24.39%, 22.55%, 16.1% and 11.07% of non-interest net income.

Where are you going?

Where is the flow of money from bank investments? "generally speaking, in the investment of banks, bonds, certificates of deposit, funds, non-standard assets and so on are more common." A bank financial market department told the reporter.

"the proprietary investment structure of banks is mainly debt investment." A banking industry analyst believes that according to the balance sheet, proprietary investment can be divided into transactional financial assets, debt investments, other debt investments and other equity instruments investments. Generally speaking, in recent years, debt investment has accounted for about 50%, while the proportion of other debt investment has been stable at 20% to 23%. Therefore, in the recent bond bull market, investment returns also follow the "rising tide lifts all boats".

According to Choice, 31 banks released debt investment data in the first quarter of this year, totaling 15.4 trillion yuan, accounting for about 53% of financial investment (28.7 trillion yuan).

The reporter combed through a number of financial reports and found that most banks attributed the increase in investor earnings to the allocation of additional bonds in the first quarter.

Among them, urban agricultural commercial bank is the most typical. Sunong Bank said that the obvious increase in investment income was based on an increase in bond investment; Zijin Bank said that the increase in investment income in the first quarter was mainly due to an increase in bond disposal income; Zhangjiagang Bank said that investment income grew by more than 200% in the first quarter compared with the same period last year, based on market research that the spread between buying and selling prices increased as a result of the proceeds from selling bonds.

Tan Yiming, chief analyst of Minsheng Securities solid Collection, believes that since the beginning of this year, the strength of agricultural commercial banks to buy bonds is obviously on the strong side, especially since March, the scale of bond purchases is significantly higher than the seasonal level. And its band operation frequency and amplitude are also increasing, showing the overall characteristics of "interest rate buys every high, interest rate stops profit every low". From the perspective of buying structure, agricultural commercial banks buy mainly inter-bank certificates of deposit, followed by interest rate debt.

A person from a small and medium-sized bank told the reporter that the amount of debt bought did increase in the first quarter, but the adjustment of the purchase volume was very flexible, and the overall industry plan would be adjusted at any time according to the market situation.

It is worth noting that small banks are keen to buy bonds, and big banks are no exception. Many banks have increased their investment returns by allocating additional bonds since last year.

According to ICBC's 2023 annual report, at the end of 2023, investment totaled 11.849668 trillion yuan, of which bonds were 11.357727 trillion yuan, an increase of 12.9 percent over the end of last year.

"interest income from bond investment is the second largest component of the bank's interest income." The Agricultural Bank of China said in its 2023 annual report that its interest income on bond investment in 2023 was 308.166 billion yuan, an increase of 30.609 billion yuan over the previous year, mainly due to the increase in the scale of bond investment.

According to the 2023 China Banking Review and Prospect report by PricewaterhouseCoopers, the bond balance of large commercial banks was 46.21 trillion yuan at the end of 2023, an increase of 12.62 percent over the same period last year, while that of urban and rural banks was 4.86 trillion yuan at the end of 2023, an increase of 16.07 percent over the same period last year.

In addition to bonds, some banks said in their financial statements that the investment growth was related to the purchase of funds. For example, the Youth Farmers Bank said that the sharp increase in investment income was due to the increase in dividends and price differences in financial assets such as fund investments.

Many institutional personages believe that most of the funds invested by banks penetrate the bottom are bonds. Yu Jinxin, chief analyst of Minsheng Securities Bank team, pointed out in the research report that while bank proprietary funds directly invest in all kinds of bonds, they will also invest in public funds whose underlying assets are mainly bonds. Mainly because, compared with self-operated direct investment in all kinds of bonds, investment public offering funds can better play the role of tax preference, thickening income and liquidity adjustment.

Can the investment income of banks continue to increase in the future? Most people in the industry think that there are many influencing factors, which need to be considered comprehensively.

The above-mentioned bank analysts believe that the high increase in earnings in the first quarter is due to the bond bull market. However, taking into account the recent volatility of the bond market, it is necessary to comprehensively consider the macroeconomic situation, changes in the market environment and other factors. At the same time, it does not rule out the possibility that the income of some institutions in the market will thicken and reach the target of stopping profits, and the market will be stampeded at a certain time, causing liquidity risk.

Judging from the bond market, Lee Sang-Yong, head of the collection team of the Great Wall Securities Industry Finance Research Institute, believes that the financial statistics released by the central bank in April are lower than expected. In the short term, it is more favorable for the bond market, the current bond market may return from shock to strong shock, but in the context of the central bank's repeated "guidance" on long-term bond yields, it is also difficult to decline too much in the short term.