The worst bank, appeared?

Evergrande "sequelae".

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divest

Shengjing Bank (HK.02066) is actively helping itself.

A month ago, Shengjing Bank issued an announcement that it intends to sell some credit assets in accordance with laws and regulations, and the buyer is Liaoning Asset Management Company.

According to the announcement, Shengjing Bank will transfer its 183.7 billion yuan of creditor's rights assets to Liaoning Asset Management Company at a consideration of 176 billion yuan.

Interestingly, as the receiver, Liaoning Assets' payment method is to issue special notes to Shengjing Bank. According to the agreement, Liaoning Asset Management (or its designee) shall pay interest to Shengjing Bank at an annual interest rate of 2.25% annually until the issuer repays the principal amount of the special notes for an initial period of 15 years (which can be extended by negotiation between the two parties) or until the issuer repays the principal amount during the debt period.

What does it mean? It is estimated that some friends are confused, and the simple summary is——

You sell me something, I want something but I don't have money to pay you, so I borrow money from you to pay, only interest in 15 years, and the principal will be given to you after 15 years.

According to the meaning of the announcement, after such a wave of operation, Liaoning assets disposed of the assets of Shengjing Bank without spending any money. If these assets appreciate in value after 15 years, they can still make a profit.

I have to say that this abacus is played very well. As an AMC company specializing in the handling of non-performing assets, this wave of operations of Liaoning Assets is regarded by the industry as "another model innovation".

For Shengjing Bank, this is a blessing, this bank needs to breathe a sigh of relief.

According to the financial report, as of June 30, 2023, Shengjing Bank's total assets were RMB1,095.165 billion, an increase of 1.2% over the end of the previous year. During the same period, Shengjing Bank issued loans and advances totaling 620.3 billion yuan.

According to this data, the asset package of 176 billion yuan to be sold is equivalent to about 28.37% of the balance of loans on the balance sheet, which is close to 1/3.

From the perspective of capital adequacy level, since 2019, Shengjing Bank's capital adequacy ratio has decreased from 14.54% to 11.52% at the end of last year, and the tier 1 capital adequacy ratio has decreased from 11.07% to 9.86%.

In addition, the provision coverage ratio of Shengjing Bank was 142.90%, an increase of 2.60 percentage points from the end of the previous year, but far lower than the average provision coverage ratio of commercial banks in the second quarter of 2023 of 206.13%.

Of greater concern is asset quality. Shengjing Bank's non-performing loan ratio jumped from 1.75% to 3.26% in 2020 and has remained above 3% since then, which is much higher than the industry average. According to data from the State Administration of Financial Supervision, at the end of the second quarter of 2023, the average non-performing loan ratio of commercial banks was 1.62%.

▲Source: Sohu Finance

If we want to explore the root cause of Shengjing Bank's situation, it is inseparable from a key player - Evergrande.

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encumber

The intersection of Shengjing Bank and Evergrande dates back to 2016.

Shengjing Bank, formerly known as Shenyang Commercial Bank, was listed on the main board of the Hong Kong Stock Exchange in December 2014.

In 2016, less than two years after Shengjing Bank was listed, Evergrande spent a total of more than 13.9 billion yuan to purchase 1.579 billion shares of Shengjing Bank through secondary market, out-of-market block transactions and acquisitions, becoming the major shareholder of Shengjing Bank. In 2019, by continuing to increase its holdings, Evergrande shares accounted for more than 35% and truly became the controlling shareholder of Shengjing Bank.

After that, Shengjing Bank's real estate loans began to climb. In 2019, Shengjing Bank's total real estate loans were 35.28 billion yuan, and by the end of 2020, this figure increased to 70.05 billion yuan. Its real estate non-performing loan ratio also soared from 0.29% at the end of 2018 to 1.98% at the end of 2021.

The main flow of these loans is, of course, Evergrande. In November 2022, China Evergrande announced that between 2020 and 2021, Shengjing Bank had provided it with a total of 32.595 billion yuan.

You must know that in 2021, Shengjing Bank's revenue will only be 15.467 billion yuan, and its net profit will be 402 million yuan.

Let's put it this way, the money that Shengjing Bank lent to Evergrande is equivalent to its 2 years of revenue, or the total net profit of the past ten years.

It is precisely because of this that in the eyes of the outside world, Shengjing Bank once became Evergrande's "money bag".

In the past two years, with the continuous increase of Shenyang state-owned assets, Shengjing Bank has been completely separated from Evergrande. But the resulting drag and bad debts have not gone away.

According to the financial report, from 2020 to the first half of 2023, the asset impairment of Shengjing Bank reached 10.625 billion yuan, 9.508 billion yuan, 9.172 billion yuan and 3.671 billion yuan respectively. In the latest report, among the top ten loan customers of Shengjing Bank, the real estate industry still occupies four seats.

In the first half of 2023, Shengjing Bank achieved revenue of 7.144 billion yuan, a year-on-year decrease of 11.6%; The attributable net profit was 738 million yuan, down 21.8% year-on-year, and the net profit of revenue fell sharply.

In addition, Shengjing Bank's non-interest net income decreased by RMB859 million year-on-year compared with 2022, a year-on-year decrease of 42.4%.

In the capital market, as of October 27, 2023, the share price of Shengjing Bank was HK$1.85 per share, down 85% from the previous high! This is no longer a slash, but a cut off of the legs and stomach above.

Dragged down by Evergrande to this point, it is no wonder that some people call Shengjing Bank "the worst bank".

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sequela

The banks dragged down by Evergrande are far more than Shengjing.

After Evergrande's lightning explosion, a list quickly spread. A number of familiar banks are all "victims" of the Evergrande incident.

▲Image source network

Taking Minsheng Bank as an example, Blueberry Finance combed data shows that in 2018-2019, Minsheng Bank signed strategic cooperation agreements with at least 18 real estate companies, including Zhenrong, Sunshine City, Jinke, Kaisa, Blu-ray and so on. Minsheng Bank alone provided more than 50 billion loans to Oceanwide Holdings and Evergrande.

According to public information, as of the end of 2022, the balance of non-performing loans of Minsheng Bank to the public real estate industry was 15.545 billion yuan, and the non-performing loan ratio was 4.28%.

If you zoom in a little more, it is not only these banks that are hurt by Evergrande.

Previously, a special group even emerged among listed companies: Evergrande's victimized stocks. This group is huge, with more than 30 A+H shares. Some of them are suppliers and some are shareholders. There are those who make real estate, some make furniture, some make paint, some make tiles, some sell wine...

They have one thing in common: they are all affected companies after the outbreak of the Evergrande crisis. For most of them, Evergrande was once the most important party, but now, the commercial bills of big money owners have become the biggest "bad debt".

There is an enterprise called Jiayu Co., Ltd., which is the domestic curtain wall leader. Due to the holding or endorsement of Evergrande's commercial acceptance bills, the total exposure of this company and some subsidiaries once reached 1.316 billion yuan. You know, from 2007 to the third quarter of 2021, the company's cumulative net profit was only 803 million yuan——

Stepping on a thunder, the money earned in the past 15 years has been lost.

In the face of this situation, Evergrande can not count on it, and many enterprises can only save themselves.

Take Shengjing Bank, after a complete separation from Evergrande, it has carried out a "big blood change" of management, and core executives such as the chairman, executive director, president, and chairman of the board of supervisors have all changed. Today, with the transfer of hundreds of billions of non-performing assets, Shengjing Bank is gradually returning to the right track.

I wonder if other companies can have the same luck? After all, there is one phrase that is still not outdated -

Real estate is the biggest "gray rhinoceros" in terms of financial risks in the mainland at this stage.