Fundamentals improved quarter by quarter, revenue, PPOP, home net profit growth have increased. The company released three quarterly results for 21 years: revenue, PPOP and home net profit in the first three quarters increased by 10.4%, 8.2% and 10.6% respectively compared with the same period last year, which increased 1.4pct, 1.3pct and 0.3pct respectively over the first half of last year, and the quarterly improvement trend has continued since the third quarter of last year. The continued improvement in revenue growth was mainly due to the positive year-on-year growth of other non-interest income. In the first three quarters, net interest income, net fee income and other non-interest income increased by 6.9%, 38.3% and 5.9% respectively compared with the same period last year. The growth rate of net interest income decreased slightly compared with the first half of the year, mainly because the growth rate of Q3 scale slowed down and interest spreads remained stable. Net fee income continued its year-on-year high since Q2, and the growth rate in a single quarter was lower than that of Q2. Other non-interest benefits from last year's low base (21Q3 year-on-year + 52.7%vs. 20Q3 year-on-year-58.2%), the first three quarters cumulative year-on-year has returned to the positive range.

Interest spreads remained stable for three consecutive quarters, asset-side loans accelerated, and debt-side deposits grew better. The company's annualized interest rate spread in the first three quarters of 21 was 1.73%, unchanged for three consecutive quarters, and the estimated return on assets and liability cost ratio showed a slightly synchronized upward trend quarter by quarter in the first three quarters. On the asset side, total loans at the end of the third quarter increased by 10.4% compared with the beginning of the year, slowing down from the end of the second quarter, but faster than last year (+ 9.7% at the beginning of the year). Interest-bearing assets increased by 8.6% compared with the beginning of the year, and the obvious slowdown was mainly due to the pressure of the central bank. On the debt side, total deposits increased by 12.3% compared with the beginning of the year, and deposits grew faster than loans, but the growth was slower than that of Q2; interest-bearing liabilities increased by 9.1% compared with the beginning of the year, except for the reduction in borrowing from the central bank. The proportion of deposits, interbank liabilities and bond issuance has all increased.

The overall quality of assets is stable, the intensity of non-performing disposal has been intensified, and the level of provision has continued to rise. At the end of the third quarter, the amount of non-performing loans increased slightly by 330 million yuan compared with the previous quarter; the non-performing loan ratio was 1.19%, unchanged from the previous quarter; and the bad disposal efforts were intensified. In the first three quarters of 21, the write-off conversion rate was as high as 104.4%, the annualized bad generation rate was 1.10%, and the 79bps increased compared with the previous quarter. In terms of forward-looking indicators, the balance and proportion of concerned loans declined, the loan rate decreased by 0.16pct to 1.70%, and the balance decreased by 1.41 billion yuan, mainly due to increased efforts to identify and dispose of the bad. At the end of the third quarter, the provision coverage rate was 331.8%, and the provision level increased 7.7pct compared with the previous quarter.

Profit forecast and investment advice: the company's retail transformation continues to deepen, with the asset side focusing on high-yielding assets such as mortgages, car loans and small and micro assets, while the growth trend of retail AUM is improving, and profitability is expected to improve. During the reporting period, profits maintained relatively rapid growth, asset quality was further consolidated, and the level of provision was basically stable. It is estimated that the growth rate of homing net profit of company 21x22 will be 11.3% and 10.4% respectively, and the current A share price will be 1.56 PE and 1.73 yuan per share, respectively. The current A share price will be 4.7X PE 4.2X 0.55X/0.50X respectively. Considering the valuation center and fundamentals of PB in the past two years, we give the company a 21-year PB valuation of 0.7x, corresponding to a reasonable value of 9.25yuan per share. Maintain a "buy" rating.

Risk hints: (1) more-than-expected decline in economic growth; (2) significant deterioration in asset quality.