On January 21, the Bank of Xi'an released its 2019 performance report. Among them, operating income increased by 14.55% year on year, and net profit increased 13.27% year on year. Brief review of revenue and net profit for the first and fourth quarters both accelerated month-on-month. 2019 operating income was 6.845 billion yuan, up 14.55% year on year; net profit was 2,675 billion yuan, up 13.27% year on year. Looking at a single quarter, 4Q revenue increased 4.80% year on year, up 0.33 percentage points from the previous quarter's growth rate; 4Q net profit increased 19.05% year on year, up 6.66 percentage points from the previous quarter's growth rate. The weighted annualized ROE reached 11.94%, down 0.67 percentage points from the same period last year. EPS was 0.61 yuan/share, an increase of 0.02 yuan over the same period last year. BVPS was 5.31 yuan/share, an increase of 0.32 yuan over the same period last year. 2. The non-performing rate fell 1 bps month-on-month, and the non-performing rate at the end of 2019 was 1.18%, down 1 bps from the beginning of the year, down 2 bps from the beginning of the year. The Bank of Xi'an's non-performing ratio has remained relatively stable since 16 years, and there is a slight improvement trend, and asset quality continues to be at the highest level in the industry. The provision coverage rate was 262.41%, an increase of 45.88 percentage points from the beginning of the period; due to good asset quality, the Bank of Xi'an's provision coverage rate increased rapidly quarterly over 19 years without a significant increase in planning, and its ability to withstand risks increased in the future. The loan disbursement ratio was 3.09%, up 0.49 percentage points from the beginning of the year. 3. Asset structure optimization At the end of 2019, Bank of Xi'an had total assets of 278.283 billion yuan, up 14.29% from the end of the previous year, of which total loans were 153,032 billion yuan, up 15.32% from the end of the previous year, 1 percentage point higher than the growth rate of total assets; its share of total assets was 54.99%, up 0.49 percentage points from the end of the previous year. The main increase is expected to be in personal consumption loans in retail savings. Total deposits were $169.736 billion, up 8.82% from the end of the previous year, 5 percentage points lower than the growth rate of total debt; the share of total debt was 66.65%, down 3.13 percentage points from the beginning of the year. It is expected that the pressure on structured deposits has declined after being strictly regulated. At the same time, the Bank of Xi'an has taken advantage of the current declining interest rate cycle to increase interbank debt and issue more interbank deposits. 4. Investment recommendations As a regional commercial bank rooted in the region and deeply involved in local economic development, the Bank of Xi'an can make full use of the advantages of Xi'an's GDP growth rate and tertiary sector share being at the forefront of first-tier cities. The growth rate of operating income and net profit in the fourth quarter accelerated. Among them, Huimu's net profit accelerated significantly and maintained rapid growth. At the same time, the Bank of Xi'an's non-performing rate continues to decline, maintaining the leading level of its peers, the provision coverage rate has increased dramatically, and there is less pressure on future planning. We continue to be optimistic about the Bank of Xi'an's performance in retail transformation and increasing investment in housing mortgages and consumer loans. Furthermore, the industry's highest core tier 1 capital adequacy provides strong support for future expansion. We expect operating income/net profit to increase 15.85%/15.57% year on year in 2020. EPS/BVPS is 0.70/5.77 yuan, maintaining the increase rating, and the target price for 6 months is 8.6 yuan.