NAB's IPO "hit and miss": NPA rate soaring, net profit down more than 12%
1min read China Agricultural Bank of Hainan's IPO journey has been a roller coaster. Since its preparation for A-share IPO in 2018, the bank has faced numerous setbacks. Recently, due to the expiration of financial data, the IPO application of China Agricultural Bank of Hainan was suspended again. Although the bank has updated and submitted the relevant financial data, its audit status is "accepted", but whether it can successfully pass the examination still has many uncertainties.
Performance of China Agricultural Bank of Hainan Slides, Its IPO Prospects Are Uncertain
The financial situation of China Agricultural Bank of Hainan is worrying. Its net profit in 2023 was Rmb2383 million, down 12.61% YoY. More seriously, its net interest margin fell from 1.99% in 2021 to 1.71% in 2023, below the regulatory requirement of 1.8%. Its asset rate also fell from 1.29% in 2021 to 0.82% in 2023. These data show that China Agricultural Bank of Hainan is facing huge challenges in profitability. Although its operating income in 2023 was Rmb11.801 billion, up 1.06% YoY, the phenomenon of "more income but less profit" shows its problem in operation efficiency. The management of China Agricultural Bank of Hainan said that the main purpose of this listing is to establish a sustainable and effective multi-channel capital replenishment mechanism through effective connection with the capital market. However, under the current performance decline, whether China Agricultural Bank of Hainan can successfully attract investors' preference is still unknown.
Bad Loan Ratio Climbs, Testing Risk Management Ability
In addition to the performance decline, China Agricultural Bank of Hainan also faces the problem of climbing bad loan ratio. As of the end of 2023, its bad loan ratio reached 1.49%, although its provision coverage ratio was 230.16%, but still reflected the pressure of its asset quality. By contrast, the bad loan ratio of Foshan Rural Commercial Bank, another bank in Guangdong, was 1.48% at the end of 2023, and its provision coverage ratio was 201.75%. The data of these two rural commercial banks show the risk management challenges faced by small and medium-sized banks in the current economic environment. The climbing bad loan ratio of China Agricultural Bank of Hainan may affect investors' confidence and further affect its IPO process. To successfully list, China Agricultural Bank of Hainan must strengthen risk management and improve asset quality to gain market recognition.
Key Reading: China Agricultural Bank of Hainan
